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Henley Centre for Customer Management
Building a Customer-centric Organisation: The Role of the Board
and the Executive Team
Professor Moira Clark
© The Henley Centre for Customer Management 2017
Building a customer-centric organisation:The role of the board and the executive team
• Does customer centricity drive great business
performance?
• How can we drive customer centricity from the
top?
•How can we get best people performance?
•How do we get the right measurements in place?
© The Henley Centre for Customer Management 2017
Customer centricity drives businessperformance
• Customer retention/loyalty
• Customer willingness to spend more
• Competitive differentiation
• Improved company and brand reputation
• Employee motivation
• Improved culture and climate
© The Henley Centre for Customer Management 2017
Customer satisfaction and businesssuccess
The Service-Profit Chain
Operating Strategy and Service Delivery System
InternalService Quality
Employee Satisfaction
Customer Satisfaction
Customer Loyalty
ExternalService Value
Employee Retention
Employee Productivity
Revenue Growth
Profitability
Source: Harvard Business review, March-April, 1994
• Workplace design• Job design• Employee selection and development• Employee rewards and recognition• Tools for service customers
• Service concept: Results for customers
• Retention• Repeat business• Referral
• Service designed and delivered to meet targeted customers’ needs
© The Henley Centre for Customer Management 2017
Customer retentionProfit impact for a 5% points increase in CR
Source: F.F. Reichheld and W.E. Sasser, Jnr., “Zero defections: quality comes to services”, Harvard Business Review, September - October 1990, pp. 105-111
Profitincrease (%) in customer
value*
AutoServiceChain
Creditcard
InsuranceBrokerage
IndustrialDistribution
IndustrialLaundry
OfficeBuilding
Management
Software0
depositsBranch
depositsBranch
30%25%
50%45% 45%
40%35%
20
40
60
85%
75%80
100
*calculated by comparing the net present values of the profit streams for the average customer life at current defection
rates with the net present values of the profit streams for the average customer life at 5% lower defection rates.
© The Henley Centre for Customer Management 2017
Amazon
8
The exception to the multi-channel rule is Amazon, which isramping e-commerce to become a channel in its own right.
Amazon: UK Banner Sales 2006e-2016f (GBP bn)
© The Henley Centre for Customer Management 2017
Understanding life-time value of acustomer
It helps to know how valuable a retainedcustomer can be
$10,000
Retained for 10 Years$10,000
$10
Single Purchase
Source: Bain & Company
“No matter how valuable I was tellingthem a customer was, our peopleneeded to have that magnitude intheir mental balance sheet.”
- Chief Executive Officer
© The Henley Centre for Customer Management 2017
Cross-selling boosts retention
Criticalillness
5%
Lifeassurance
55%
Incomereplacement
15%
8%
3%
7%
7%
© The Henley Centre for Customer Management 2017 11©Moir
Net Promoter Score: LSE report Advocacy drives growth
Email surveys: 83%Phone surveys: 90%
© The Henley Centre for Customer Management 2017 12
The Customer Effort Score
Source: HBR article - “Stop Trying to Delight Your Customers”by Matthew Dixon, Karen Freeman, and Nicholas Toman
LOW HIGH
HIGHPREDICTIVE POWER FOR REPURCHASING
PREDICTIVE POWER FOR INCREASED SPENDING
CSAT
NPS
CES
The Customer Effort ScoreOutperforms the Net Promoter Score and customer satisfaction measures in predicting behaviour.
© The Henley Centre for Customer Management 2017
Measuring easy
Are we easy to do business with?
Yes NoNeither
If not why not?Clark , HCCM 2015
© The Henley Centre for Customer Management 2017
Building a customer-centric organisation:
You need to:
•Drive customer centricity from the top – involve
the Board and the Executive Team
•Involve them in customer insight and customer
experience
•Ensure best people performance
© The Henley Centre for Customer Management 2017
• Only one third of Top Teams are ALIGNED!
We also need:
• Belief in values – linking the values of the company
to the values of the brand
Strategic alignment
© The Henley Centre for Customer Management 2017
Belief in valuesSome Unilever brands
© The Henley Centre for Customer Management 2017
We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.
Our identity expresses Unilever's core values, with each icon representing an aspect of the business.
We aim to be a trusted corporate citizen wherever we operate in the world, respected for the values and standards by which
we behave.
Linking the values of the companyto the values of its brands
© The Henley Centre for Customer Management 2017 21
First Direct
• Twice winner of the overall Unisys Management Today Service Excellence Award
• Core Values– Respect
for individuals– right first time
efficiency and accuracy– Responsive
to customer needs and each other
– Contributionby individuals and teams to first direct
– Opennesswith each other and customers
– Kaizencontinuous improvement
© The Henley Centre for Customer Management 2017
Building a customer-centric organisation
You need to:
•Drive customer experience from the top – involve
the Board and the Executive Team
•Involve them in customer insight and customer
experience
•Ensure best people performance
© The Henley Centre for Customer Management 2017
You need to develop good customer insight
Customer insight
© The Henley Centre for Customer Management 2017
SemioticsEthnography
Customer insightUse the full toolbox…………
etc
Get into the mind of the customer!
“A fresh and not yet obvious understanding that can become the basis for competitor advantage”.
Source: defyingthelimits.com, Mohanbir Sawhney, Kellogg School of Management
© The Henley Centre for Customer Management 2017
The Great Recession 2008-2009
2009: Hyundai Assurance: If you lose your job or income withina year of buying the car, you can return it with no penaltyto your credit rating. Industry sales declined 37% but Hyundai sales nearly doubled and sold more than Chrysler who had 4Xmore dealerships
© The Henley Centre for Customer Management 2017
Achieving customer centricity
The importance of creating memorable experiences
© The Henley Centre for Customer Management 2017 27
The Customer Experience Model
Emotional
Access
Application of
Knowledge
Atmosphere
Caring
– Attitude –
Caring
– Procedures, Processes –
Communication
Sector
Differences
Individual
Outcomes
Peer-to-Peer
Relationship
Reliability
Safety
Social Impact
Supplier
Condition
Value for
Money
Value for
Time
Variety /
Choice
ProductService
Experience*
**
*
* Emphasis on attitude
© The Henley Centre for Customer Management 2017
Knowledge – From Brain to Heart
Two types
Articulate knowledgeWe can write it down
•BA (hons), MBAs•Accountant, Engineer
The Brain•Physical need
•Practical•Comfort•Sensible
•Common Sense•Rational
Tacit knowledge•Silent
•Implicit•Can’t write it down
Heart•Experience•Emotions
•Esteem•Aesthetics
•Impulse
Tacit knowledge - the next generation of competitive advantageProfessor Moira Clark
© The Henley Centre for Customer Management 2017
Strong BrandWeak Brand
Deppe, M.; Schwindt, W.; Kugel, H.; Plassmann, H.; Kenning, P. (2005): Non-linear responses within the medial prefrontal cortex reveal when specific implicit
information influences economic decision-making, in: Journal of Neuroimaging, Vol. 15, No. 2, 2005, pp. 171-183
© The Henley Centre for Customer Management 2017 32
1. Extent of Personal Contact
2. Flexibility
3. Implicit Understanding of
Customer Needs
4. Pro-activity in Eliciting
Customer’s Objectives
5. Pro-activity in Checking
that Everything is OK
6. Promise Fulfilment
7. Knowledge
1. Helpfulness
2. Value for Time
3. Customer Recognition
4. Promise Fulfilment
5. Problem Solving
6. Personalisation
7. Competence
8. Accessibility
B2B B2C
Important CE Factors in B2B and B2C
© The Henley Centre for Customer Management 2017 33
Important CE Factors in B2B
1. Extent of Personal ContactThe extent to which the company deals with the customer through personal contact methods
2. Flexibility How willing and able are the company to modify their offering in response to the customer’s specific needs or changing requirements?
3. Implicit Understanding of Customer NeedsDoes the company understand the context of the customer’s order? Do they use their prior knowledge of the customer and their business to serve them better?
© The Henley Centre for Customer Management 2017 34
Important CE Factors in B2C
1. Helpfulness
Are they really prepared to help me – where nothing is
too much trouble for their staff?
2. Value for Time
Do they respect and make efficient use of my time – by
shortening queues and delivering what they provide
efficiently?
3. Customer Recognition
When I contact them do they recognise and
acknowledge me as an individual?
© The Henley Centre for Customer Management 2017
‘Client ease’ is a client’s perception of how easy a company is to do business with. It is the amount of time and energy that he/she has to spend in an encounter with a brand or an organisation.
• It is different from the objective amount of time and energy.
• It is the nonmonetary cost of consumption.• It can be a global judgment or a judgment about a
single encounter.
What is ‘ease of doing business’?
Clark and Bryan, HCCM 2013
© The Henley Centre for Customer Management 2017
Why measure effort – cont?
• Drives advocacy
• High actionable feedback – tells you what drives your
clients mad!
• Applicable to all channels and all businesses
• Engages and resonates with staff
• Low effort = low cost for everyone!
© The Henley Centre for Customer Management 2017
1. Queuing and waiting time
2. Transaction/consumption time
3. Cognitive energy
4. Emotional energy
5. Physical energy
Dimensions of client ease
Clark and Bryan, HCCM 2013
© The Henley Centre for Customer Management 2017
Cognitive energy
• Too much choice/information/jargon
• Lengthy terms and conditions
• Welcome packs that overwhelm (0.6 Kilo! And
150 pages)
• Complicated contracts
• Remembering passwords
• Complaints procedures not transparent
• Web site – difficult to navigateClark and Bryan, HCCM 2013
© The Henley Centre for Customer Management 2017
‘Thinking is to humans as
swimming is to cats. We can
do it if we have to, but we’ll
do anything to avoid it.’
We are cognitive misers!
Kahneman, 2012
© The Henley Centre for Customer Management 2017
Thinking fast and slow!
Source: Kahneman 2012
Perception Intuition Reflection
Autopilot System 1 Pilot System 2
Characteristics Effortless, triggers emotion, fast, unconscious, looks for patterns, looks for causation, creates stories to explain events
Effortful, slow, logical, conscious,Deliberate, can handle abstract concepts
Advantages Speed of response, easy completion or routine or repetitive tasks
Allows reflection and consideration, consequences, options, logic, maths and statistics
Disadvantages Jumps to conclusions, unhelpful emotional responses, can make errors that are not detected or corrected
Slow so requires time, requires effort and energy which can lead to decision fatigue
Input Decision
© The Henley Centre for Customer Management 2017
The autopilot processes everything weexperience through our senses
Autopilot11,000,000 bits per second
Pilot 40 bits/s
© The Henley Centre for Customer Management 2017
Emotional energy
• Attitude of staff/ people relationship
• Inability to access the right people/changes in account
manager/adviser
• Inability to access the right processes or procedures
• Complaints not being properly dealt with
• Being kept waiting
• Safety and security
• Only want to talk when you want to sell somethingClark and Bryan, HCCM 2013
© The Henley Centre for Customer Management 2017
Achieving client centricity
You need to develop a client orientated culture and put
the client at the heart of the business
Increased satisfaction 41% Increased satisfaction 27%
© The Henley Centre for Customer Management 2017
Time energy
• Waiting / queuing – in any channel
• Simplified procedures to shorten time effort
• Explaining things again and again
• Being given the run around
• Distance travelled
• Telepresencing
Clark and Bryan, HCCM 2013
© The Henley Centre for Customer Management 2017
Make it easy to be a client
Companies create loyal clients by making it easy for them to be a client: helping them to solve their problems quickly and easily
‘Making It Easy to be a client’
© The Henley Centre for Customer Management 2017
Measuring easy
Are we easy to do business with?
Yes No
If not why not?
Clark , HCCM 2015
© The Henley Centre for Customer Management 2017
How do customers judge value?
Goal theory, which suggests that individuals evaluate the quality of products and services not directly but with reference to their goals.
Quality and value are related concepts at different levels of the customer’s goal hierarchy, value corresponds to goal fulfilment and quality to the excellence/ superiority of the product which enables that value.
Perceived customer value
© The Henley Centre for Customer Management 2017
How do customers judge value?
We define it as:
“Perceived customer value is the extent to which customer’s perceive achievement of their goals through customer
experience.”
We make no prior assumptions as to whether these goals are collective, individual or both.
Perceived customer value
© The Henley Centre for Customer Management 2017
Preventative and promotional goals
Preventative goals
Preventative goals minimize problems for the customer arising out of the
relationship
For example:
– value for money
– easy to do business with
– minimize stress
© The Henley Centre for Customer Management 2017
Preventative and promotional goals
Promotional goals
Promotional goals address customer aspirations and desired
enhancements
For example:
– idea generation
– feeling important
– knowledge acquisition
© The Henley Centre for Customer Management 2017
Perceived customer value
Do your customers perceive that: Yes/NoO
rgan
isat
ion
al
Preventative goals
01. you offer value for money?
02. your organisation is easy to do business with?
03. you help them to be cost effective?
Promotional goals
04. you help them with idea generation?
05. you help them to acquire knowledge?
06. you help them improve their value proposition/s?
07. you help them improve their business processes?
08. you are flexible to do business with?
09. you help them to enhance their margin
Ind
ivid
ual
Preventative goals
10. you help them have confidence in the relationship?
11. you help them to be comfortable?
12. you help them with their time efficiency?
13. you are fair in how you manage the relationship?
14. you reduce personal risk?
15. you minimise stress for them?
Promotional goals
16. you are friendly?
17. you help them build their esteem/reputation?
18. you make them feel important?
© The Henley Centre for Customer Management 2017
Perceived customer value
Preventative Goals Promotional Goals
Organisational
1. Value for money2. Ease/customer effort
(org)3. Cost effectiveness
(by reducing customer’s costs)
4. Idea generation5. Knowledge acquisition6. Value proposition
improvement7. Business process
improvement 8. Flexibility9. Margin enhancement
Individual
10. Confidence11. Comfort12. Individual time efficiency13. Fairness14. Personal risk reduction15. Stress minimisation
16. Friendship17. Esteem/reputation18. Feeling important
© The Henley Centre for Customer Management 2017
How do we measure customer experience?
• CSAT surveys
• NPS
• Ease of doing business
• Text analytics
Are we easy to do business with?
Yes No
If not why not?
© The Henley Centre for Customer Management 2017
Building a customer-centric organisation
You need to:
•Drive customer experience from the top – involve
the Board and the Executive Team
•Involve them in customer insight and customer
experience
•Ensure best people performance
© The Henley Centre for Customer Management 2017
The quality and history of your relationships is
perhaps the only source of competitive advantage that
ultimately cannot be copied.
People
© The Henley Centre for Customer Management 2017
• Better business outputs
• Better financial performance
• More loyal customers
• Improved innovation
• Better safety
• Can weather the storm better in difficult
times
Best people performance: Does it really matter?
© The Henley Centre for Customer Management 2017
Research model
Employee Engagement
Reputation
Affective Commitment
Advocacy
J0B
SATISFACTI
ON
Trust Senior Management &
My ManagerClimate Servant LeadershipCohesionOrganisational SupportEmpowermentEmployee Initiative(Low) PressureCustomer Care Intention
To Stay Customer Orientation
PERFORMANCE
Employee resilience
Employee effort
© The Henley Centre for Customer Management 2017
Research Method
Used structural equation modelling
Branches with less than 3 responses were dropped
The sample consists of 2056 colleagues from 335 branches
© The Henley Centre for Customer Management 2017
Climate is the atmosphere that employees perceive is created in their organisation by the:
Policies
Practices
Procedures
Rewards of the firm
“We judge companies - and managers - by their actions, not their pious statements of intent.”
Sir Adrian Cadbury
Climate - “The feeling in the air”
© The Henley Centre for Customer Management 2017
Service
Climate
Employee
perceptions of
practices,
procedures and
rewards
Customer and employees
perceive service quality
Customer
satisfaction
Customer
retention
Service
quality
Employees set
own priorities
Draw conclusions
about organisation’s
priorities
Modelling customer retention ratesand perceptions of service quality
© The Henley Centre for Customer Management 2017 64
5
1
Warmth &Support
Cohesion
Rewards &Recognition
CustomerCare
Structure
4
3
2
12
34
5
1
3
5
2
4
1
2
3
4
5
1
2
3
4
5
Organisational climate themes
© The Henley Centre for Customer Management 2017
Cohesion
“Coming together is a beginning. Keeping together is progress.Working together is success”
Henry Ford
© The Henley Centre for Customer Management 2017
Managers
Staff
Customers
2.
Head Office/
Senior Managers
Managers
Staff
Customers
1.
Head Office/
Senior Managers
Key ‘Common
enemy’
High Retaining Companies
Boundary-spanning relationships andthe ‘common’ enemy
© The Henley Centre for Customer Management 2017
Boundary-spanning relationships and the ‘common’ enemy
Managers
Staff
Customers
2.
Head Office/
Senior Managers
Managers
Staff
Customers
1.
Head Office/
Senior Managers
Key ‘Common
enemy’
High Retaining companies
Competition
is the
common
Enemy
© The Henley Centre for Customer Management 2017
Boundary-spanning relationships and the ‘common’ enemy
Low Retaining Companies
5.
Head Office/
Senior Managers
Managers
Staff
4.
Head Office/
Senior Managers
Customers
Managers
Customers
Staff
6.
Head Office/
Senior Managers
Managers
Customers
Staff
Key ‘Common
enemy’
Still care a bit
about customers
© The Henley Centre for Customer Management 2017
Warmth and support
“Train people well enough so they can leave,Treat them well enough so they don’t want to”
Richard Branson
© The Henley Centre for Customer Management 2017
Empowerment
“Learn the rules like a pro so that you can breakthem like an artist”
Pablo Picasso
© The Henley Centre for Customer Management 2017
Participation – have a voice!
“Freedom is participation in power”Marcus Tullius Cicero
© The Henley Centre for Customer Management 2017
Profile of organisational climate themes
10
2
Warmth &Support
Cohesion
Rewards &Recognition
CustomerCare
Structure
8
6
4
24
68
10
2
6
10
4
8
2
4
6
8
10
2
4
6
8
10
High street bank
On-line financial company
Air-line
© The Henley Centre for Customer Management 2017
Building a customer-centric organisation: the role of the board and the executive team
• Customer experience does drive great
business performance?
• You need strategic alignment from the top to the
bottom
• Managers should track perceived value measures
as well as customer experience measures in
customer surveys
•Senior executives need to create an organisational
climate that is focused on the customer
Main Sponsor
www.hccmsite.co.ukMaximising Value through Relationships
Henley Centre for Customer Management
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