CMO EXCLUSIVES | October 23, 2012
Customer experience is becoming a key brand differentiator–a strategy that needs to span the entire enterprise with measures in place to gauge loyalty, advocacy, and marketing ROI.
Its importance was underscored late September in Miami at theCustomer Experience Exchange (@cmexchange), where more than 60 chief customer officers and global/regional heads of customer experience, marketing, and customer strategy from Fortune 500 multinational companies gathered. Among the attendees were executives from Microsoft, Verizon, JP Morgan, Walgreens, General Motors, NBA, Eli Lilly, Cisco, USAA, and many more.
“The most pertinent outcome has been to see where the industry is headed, and how Fortune 500 enterprises are increasing their focus on key changes in their customers’ lifestyles, such as their increased usage of social media, their more connected mobile lifestyles, and their greater need for local information,” said Phill Hirons, director of the Customer Experience Exchange.
The event was co-hosted by Forrester Research, which runs its own customer experience practice. Forrester was represented by Moira Dorsey (@MoiraDorsey), VP, practice leader–customer experience. Her main message was that customer experience in the “age of the customer” depends on a new business discipline. She also articulated three critically important points for customer experience professionals and their companies:
1. Expectations of customer-experience professionals are high, but understanding of what they need to do is low. “We’re in the ‘Age of the Customer,’ where the only source of sustainable competitive advantage is customer experience. Delivering experiences that meet or beat customer expectations is worth real money,” Dorsey said. “Here’s just one data point to prove it: For five years, we’ve been running a large-scale consumer study called the customer experience Index (CXi), which proves that customer experience leads to profits. Over a recent five-year period, a portfolio of customer-experience leaders from our CXi grew by 22.5%, compared with a -1.3% decline for the S&P 500 market index and a -46.3% decline for the laggard portfolio. Earning profits that are comparable to these leaders requires businesses to get serious about the way they define, implement, and manage the customer experience. But one of the major obstacles to success is that the tools and capabilities required for delivering customer experiences that match customer expectations are not well-known or understood.”
2. You have a customer experience ecosystem whether you know it or not. “At Forrester, we define customer experience as how customers perceive their interactions with your company. Whether you know it or not, your organization has an ecosystem that determines the quality of your customers’ interactions,” Dorsey said. “Forrester defines a customer-experience ecosystem as the complex set of relationships among a company’s employees, partners, and customers that determines the quality of all customer interactions. Without an understanding of their customer-experience ecosystems, companies fail to connect behind-the-scenes activities to customer interactions and struggle to make improvements.”
3. Customer experience leads to long-term profits. . .but only if you treat it as a business discipline. “Organizations that aspire to make the leap from incremental customer-experience improvements to breakthrough transformation must routinely perform the practices required to design, implement, and manage customer experience in a disciplined way,” Dorsey said, adding that the practices fall into six high-level disciplines: customer-experience strategy, customer understanding, design, governance, measurement, and culture.
“Collectively, these business disciplines represent the most important things that the best companies we know of do to be great at customer experience,” she added. “Organizations looking to move up the maturity curve should take stock of how they perform these practices today—if at all—and build a plan to turn an ad-hoc set of activities into a self-improving customer-experience management machine.”
Rethinking Expectations Before Evaluating Experience
Many other customer-experience experts participating in the conference also shared their insights with me. Take Exchange co-chair Lacey Grey (@greycustomers), who is well-regarded as an early customer-experience advocate. She was among the first executives whose job title included “customer,” when she was the chief customer officer at EarthLink, an early U.S.-based Internet access provider in 1999. Lacey, also formerly Merck & Company’s customer experience leader, related a conversation she had with a brand manager for a U.S. CPG company. They were discussing the role his customers played in the future growth of his brand.
“My friend and I discussed the need to stop thinking that his company knew his customers and listen to their current needs, instead. Customers’ needs are constantly changing, so the company needs to be constantly listening and taking action on those needs that are in their wheelhouse,” she said. “We talked about a time recently when he went to get an oil change and had what he considered to be a very poor customer experience. I argued that maybe it was an appropriate customer experience, given the needs he expressed at that time. He had chosen an oil change location based on his spur-of-the-moment availability. They were not the cheapest or the best, but they were available. When he considered what his needs were at that time versus what the company delivered, he found that they had not been bad at all.”
Lacey said they also discussed the multichannel nature of the customer experience: “Our potential oil-change customer may go to a social media site to ask for recommendations on companies that are environmentally friendly. That same customer may go to the company’s Web site to find a nearby location, call the location to ask about a particular promotion, and come in to a location for an oil change. All of the channels the potential customer uses must align. This is not to say they must all contain the same level of detail, but they need to refer to each other and support the same message. The final element is to deliver on what is promised, which is where the operational rubber must meet the road.”
Customer Experience In The DNA
Another early customer-experience advocate is Carol Borghesi (@cborghesi), founder of Customers First Culture. Borghesi, former SVP, Customers First Culture, at TELUS, was also an early advocate for building the customer experience into the core of the enterprise. She has applied her beliefs in the telecom vertical to improve the historically very poor customer-experience delivery in that vertical.
“Back in 1982, we began to be concerned about quality in the eyes of the customer, engaging our people, and understanding the voice of the customer as contact centers began to rise,” she said. “By 1992, we were grappling with technology that would support the unprecedented volume of contact with IVR, likely the most reviled of all contact management innovations. Now in 2012, we have a blizzard of contact channels, a highly evolved customer with a penchant for broadcasting their feelings, and really big contact-center operations distributed around the globe, decrying the promise of customers doing it for themselves online without the help of a human being.”
In light of this progress, Borghesi posed the question about why customer centricity is still a challenge. Her answer?
“Changing the DNA of any firm, big or small, takes a strategic approach supported by the most influential people in the company and underpinned by initiatives, investments, and most crucially people policies,” she said. “Evidence abounds that organizations do not make customer experience-friendly decisions often because we worship at the altar of cost reduction in justifying investment and innovation instead of putting the customer first.”
Borghesi also stressed the importance of a customer strategy “anchored” in an enterprise’s strategy “to leverage resources across channels, understand total cost to serve, and access comprehensive data to benefit customers and the business,” she said. “It is time to revisit our approach and take control of delivering hassle-free customer experiences that are sustainable and reorganization-proof.”
Easier said than done, of course.
“We are living in a world where customer expectations are greater than ever. The norms of communication are so incredibly different to that of 10 years ago. . .it’s hard to keep up,” said Prelini Udayan-Chiechi (@prelini), director, EMEA marketing, at Lithium Technologies, one of the strategic partners at Exchange. “It’s difficult to keep up philosophically, from a process perspective, and from a technology perspective with customers today being more connected, empowered, impatient, and untrusting.”
A solution resides with social, Udayan-Chiechi added. “Companies are beginning to understand that customer experience will be the next battleground in the social world, with social strategy and social support becoming keep imperatives in solving the customer experience challenge,” he said. “The shift can be seen across the board, from traditional CRM to social CRM, where technology becomes the key driver to address the challenges while meeting ROI expectations.”
5 Steps To Improve Loyalty
During her keynote, Ica van Eeden (@icavane), chief customer officer at Sun International, shared her multiyear customer-experience journey and lessons learned about loyalty. “The relationship with a customer may often start as a rational choice, but in the hospitality industry [and most other industries], unless you can connect on an emotional level, customers might choose a competitive option when they buy again,” she said. “To achieve superior customer-experience delivery is not a simple task and involves a number of underlying factors because customer loyalty is a multidimensional construct.”
Eeden mapped out five customer-centric steps her organization follows to achieve increase loyalty:
Step 1: Gain better insight and understanding of customers’ needs within the context of their lives.
“What we mean here is to understand why they chose us–their motivation for visiting us and the reasons why they need us to deliver service in a certain way,” she said. “As an example, for a leisure guest that visits us for his/her annual holiday, the check-in should focus on telling them about all the activities and facilities on the resorts, while for a business traveler who is rushing to a meeting, check-in must be professional, fast, and efficient.”
Step 2: For our frontline to understand the type of service we believed would differentiate us, we had to create a shared philosophy.
“We had to use an analogy to make the concept of ‘how we do things’ practical,” Eeden said. “We did this with the concept of a recipe–e.g., a vanilla cake is different from a chocolate cake because of a) the ingredients and b) the method or process you use when you make it. Similarly, when we deliver ‘Sun International service,’ we have some unique ingredients and a very specific method or process when we interaction with guests.”
Step 3: Enable service-delivery people with the needed tools to serve guests from a knowledge base.
“Give them access to the right and relevant information through a CRM technology and a shared database across all our operations to supply us with a single view of the customer,” she said.
Step 4: Endorse that we are allowed to have fun at work, and ensure that we create engaged people who, in return, will engage our guests.
“We did this through storytelling, music, theatre, games, workshops, and a purpose-created soap opera at a fictitious property where everything goes wrong, yet when we follow our service principles and interaction process, we are able to resolve any challenge and delight our guests,” Eeden said.
Step 5: Prove the results and returns to the business as we measure guest experience (beyond Net Promoter) through feedback (voice of the guest), and use the information to actively improve our service delivery.
“Loyalty will in the future not depend on the functional drivers for service. So if frontline people are only trained in the transactional aspects, they will not be able to connect on a personal and emotional level with guests,” she said. “. . .In the future, the companies that will succeed in gaining [customer] loyalty will need to ensure that it does so with authenticity, humanness, urgency, and a very clear understanding of customer needs beyond just the immediate rational service request.”
Keep It Simple. . .
Customer-experience roots run deep for David Perrotta (@perarena), former managing executive, customer experience and cultural transformation, at Vodafone Group. He discussed with me his pragmatic, straightforward approach to helping companies transition to embedding a customer-centric experience culture and disciplines.
“I still remember 30 years ago being sent by my mother to the corner store to buy eggs, milk, or flour. What I loved about the store is that Lina, who owned the store, always greeted me by my name and asked how my family was,” Perrotta said. “If my mother was unwell, Lina would always give me soup to take home at no charge. She occasionally would give me a special sweet treat if she’d heard I’d done well at school. She did this with everyone in the neighborhood.”
These days, however, the customer touch is less personal. “Over time, human instinct and memory have become very dependent on technology. We rely on CRM, data warehouse, loyalty campaigns, and so on to track. . .customer patterns and behaviors,” Perrotta said. “Quite often, organizations I interact with get caught up in the complexity and forget about simplicity. Surrounding the complexity is a host of rules, processes, and policies that exist for customers that determine the type of experience that should unfold. . . .Customer experience is all about psychology. It’s the ability to influence a heart and evoke an emotion. . .I wish there were more Linas in this world.”
NCompass International’s Donna Graves, CEO, and Matt Mayer, SVP, also emphasized the importance of a quality experience between the brand and the consumer.
“The discipline of marketing that corporations are using more and more to effectively reach their customers is experience marketing,” they said. “Experience marketing allows consumers to feel, touch, and engage with the brand in a personal and meaningful way. The experiences create positive associations, thus allowing consumers to develop a passionate relationship with a brand. These relationships turn consumers into advocates who become evangelist for the brand. People talk about their experiences. . .they don’t talk about Web sites.”
Experience marketing is no longer reserved to just lifestyle brands, Graves and Mayer added. “Today, companies like Microsoft, Staples, and American Express are using it effectively to reach both consumers and employees. From employee recognition to consumer loyalty programs to sales meetings, these companies are using experience marketing to successfully engage the consumer and deliver their brand message,” they said. “These companies are also seeing the results in a measurable way as stated in a recent EMI/Mosaic study where 75% of companies with large experience marketing budgets anticipate an ROI of more than 5-to-1.” (Graves and Mayer recommended reading this Forbes article.)
10 Insights To Improve Customer Experience
I also delivered a keynote about what we are learning at FanKix.com, where I am the global CMO. By providing online social entertainment experiences, we are learning, or validating common truths, about human nature in delivering exceptional experiences. One of the key points I made was that as companies adopt customer experience into their business models, they should consider thinking about customers as “fans” of their brands, and moving to even higher ground–from experience to engagement.
I shared 10 actionable insights that I believe are relevant for many other companies to positively impact customer experience:
- Design and operate with a “FanFirst” mindset.
- Fans are passionate about their passions.
- Fans are buzy buzzing–doing our marketing.
- Fans like to hang with friends and other fans.
- Fans (a.k.a. customers) are more social than your company.
- Integrating social networks grows audience.
- Fan “socialness” creates “smart sticky” engagement.
- Fans love live and video talent engagement.
- Fans are mobile and multiscreened.
- People like to be treated personally.