what is customer experience? · people describe customer experience in many different ways. the...
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WHAT IS CUSTOMER EXPERIENCE?
1. What Is Customer Experience?
People describe customer experience in many different ways. The definition that we like to use for customer experience is:
The perception that customers have across all their interactions with our company.
How it feels to do business with us.
We measure how it feels to do business with us from 3 perspectives:
1. How effectively did we meet their needs?
2. Is it enjoyable to do business with us?
3. How easy is it to do business with us?
These three metrics comprise our Customer Experience Index.
As we can see from this definition, customer experience is in the eyes of the beholder; and therefore, only a customer can accurately judge it.
Customer experience is the outcome of all of the touch points that our customer has with our organization. This defines how our customer understands what we offer, determines what we value, and judges how much we consider their needs when they interact with us. These touch points become our brand experience to customers.
The “discipline” of customer experience management is to:
A. Rethink the operation of our business from our customers’ point of view – from touch points they would define (vs. the siloed business processes of our operation or our organizational chart)
B. Be deliberate about understanding and managing these touch points
C. Building accountability for the experiences we deliver
2. Why Is Customer Experience Management Important?
The importance of customer experience is best captured by a quote from Walt Disney:
Do what you do so well that they want to see it again and bring their friends.
Disney recognized the connection between customer experience and loyalty. Research has repeatedly shown this connection.
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Both business-to-business (B2B) and business-to-consumer (B2C) customers make buying decisions based on the recommendations that they receive from colleagues, friends, relatives -- and complete strangers. In the 2010 Keller Fay “Talk Track Report,” research shows that 78% of buying decisions in B2B and B2C businesses are made based on others’ perception of a company and the experience it delivers.
Functions within our organization often act independently without consideration for how we collectively connect from the customers’ point of view. Each group plans, budgets and executes tasks that meet their individual operational score cards and metrics. Over the years, attempts to fix this disconnect haven’t addressed the cross-organizational challenge.
Customer experience management efforts are required to align and unite multiple parts of our organization to deliver a cohesive set of interactions with our customers. It enables our organization to rethink the business with new metrics - to purposefully plan and deliver an experience that will “earn the right” to our customers’ raves and their continued business.
Figure 1: Customer Experience Management Focuses On The Entire Customer Experience
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3. How Is Customer Experience Different Than Customer Service?
Customer service is a distinct operating department that deals with customer problems and issues. In many cases, our leaders and company members mistakenly believe that “all things customer” are solved or created in customer service. This is not true, and in fact this misconception is one of the reasons why many customer-focus efforts fail.
Customer service departments grow because customers need to reach out for help – when experiences that should be running smoothly do not. When we receive disappointing survey results, we often focus exclusively on finding problems in the customer service organization.
Customer experience, on the other hand, is the connection that we make with our customers across all functions and touch points (see Figure 2).
For our organization, customer service deals with some key “moments of truth” for our customers. So that function is an important participant in most efforts to improve our customer experience. But we can’t just focus on customer service interactions or offload responsibility for customer experience to our customer service organization.
Figure 2: Customer Service is Part of the Overall Customer Experience
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4. What Are The Keys To Success In Customer Experience?
For our organization that wants to become a customer experience leader we need to build and develop new competencies that will live across every part of our operation. These capabilities must become embedded within our regular processes for how our organization identifies priorities, changes processes, builds and rolls out products, recognizes and rewards, and communicates internally and externally.
NEED TO CREATE NEW GRAPHIC
Here are five of the key areas that our customer experience leaders must focus on:
Aligning our Operation across the Customer Experience. Reframing our business in
terms of how our customers experience our operation is a fundamental action critical to
success. This provides our organization with a framework from which to discuss, develop
and hold people accountable for our business operations.
Building Experience Based Customer Listening (VOC). Because of the way we take
feedback and then hand it off for resolution down the silos, we inadvertently send a “false
positive” to our CEO and company leaders that customer issues are being resolved. As
results come in from our surveys, reports, and now social media, they are handed over to
an operating area or silo to “go work on it.” The survey results are sent to our functional
areas in our company where we interpret the results and decide what we will or will not do.
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Establishing Experience Reliability & Accountability Metrics. This part of the work is
about consistency in our experience, by proactively managing the key touch points with
shared accountability across the silos. This includes identifying and establishing KPI’s (key
performance indicators) for our priority customer experience touch points. It includes
bringing our cross-functional teams of people together to take experiences from broken to
reliable to ultimately a differentiating moment.
Making our Customers an ASSET of our Business. The customer experience we
deliver is largely responsible for growing or shrinking our customer base. Yet we don’t
traditionally talk about this asset with the same rigor in our business as we do meeting
sales targets, production goals or competitive benchmarks. Successful customer
experience work places focus on the impacts of experience as it relates to the growth or
loss of our customers.
Culture: Delivering a “One Company” Experience. For our business to be most
successful in delivering a consistently good customer experience we must work across our
departments to enable the business works together. Our leaders need to think: how do we
get rid of the roadblocks? Our middle managers need to think: how do we work together
across the departments and get rid of some of our own policies and procedures that get in
the way of a united experience? Our front-line employees need to think about issues like:
how do we hire folks congruent with our core values, and enable and train them to bring
the best version of themselves to work.
5. How Should Success Be Measured?
Keep Customers Longer. Improving CX leads to higher loyalty — specifically retention,
enrichment, and advocacy. For example, time Warner Cable created a new service for its
highest-value customers called SignatureHome. after rollout, the NPS of these customers
jumped from -1 to 40 and customer retention increased by an average of three months.
This, multiplied across millions of customers in the segment, was worth hundreds of
millions of dollars. When 1-800 Contacts implemented a closed-loop NPS survey
feedback process that made it easier for employees to follow up with clients, the firm saw
a 13-point bump in NPS and a 12% increase in customer retention.
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Grow Revenue Faster. In a recent analysis of customer experience quality and revenue
growth in five industries, Forrester found that companies with superior CX grew revenue
faster than their competitors with inferior CX: Collectively, the five CX leaders had an
average revenue CaGr of 17%, compared with 3% for their five CX laggard competitors.
For example, compare the disparate growth performances of CX leader Charles Schwab
and CX laggard E-Trade: From 2010 to 2015, Charles Schwab grew revenue by an
average of 10.7% per year, while E-Trade only managed to grow by 1.6% per year.
Improve Profit Margins. Customers who give scores in the “excellent” category of
Forrester’s CX index are 4.5 times more willing to pay a premium for the experience than
customers who have “very poor” experiences. That’s why, for a comparable room in the
same building, the Four Seasons Las Vegas with its five-star rating on Expedia commands
a 100% price premium over the Mandalay Bay hotel, which has a four-star Expedia rating.
Reduce Costs. Companies have linked CX improvements to reductions in service,
acquisition, processing, and engineering costs. For example, Delta Air Lines implemented
call routing with Nuance’s natural language recognition to automate inquiries. as a result,
the number of misrouted calls decreased by 15%. Not only could the airline serve
customers faster but it also saved over $3 million in the first year alone. Working with
Clarabridge, Health Care Service Corporation combined insights about its customers’
experience from across channels with operational data to find where customers struggled
during experiences. It used that analysis to identify experience improvements like
proactive payment alerts and enabling online changing of the primary care provider, which
helped reduce the number of calls. taken together, these opportunities equated to cost
savings of nearly $2.5 million.
Strengthen Employee Engagement. Challenging employees to deliver better CX builds
stronger engagement and loyalty. The reason is simple: A passion for serving customers
is a choice that employees make, often several times a day. When they’re happier, they’re
more likely to make the right choices — and more likely to stay with the company. For
example, Cleveland Clinic transformed its culture to focus on delivering great patient
experiences and found that employee engagement rates began rising a year after patient
experience metrics started rising. Employee engagement directly affects the bottom line:
A study by human resources consultancy Towers Watson found that companies with the
highest engagement scores had average one-year operating margins of more than 27%,
while companies with low engagement scores had average operating margins of less than
10%.
Lessen Regulatory Compliance Risks. Unhappy customers sometimes go the extra
mile and complain to government regulators. that can result in calls from regulators to
offending companies — conversations that executives at all firms dread — particularly in
highly regulated industries like healthcare and financial services. Working with tech
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vendor Apigee, Independence (previously independence Blue Cross) built a model that
predicts which of its members are likely to complain to Medicare. Independence’s call
center now gets early notifications when members are at risk and reaches out to them. the
result for independence was a significant reduction in member complaints to Medicare.
Figure 3: Great CX Drives Business Results
6. What Does A Customer Transformation Journey Look Like?
To Get To Customer experience Maturity, Firms Must Pass Through Four Phases
Forrester found that firms that have successfully improved CX maturity all took the same four-
step path. They learned to find and fix bad customer experiences, adopted practices that made
good CX behavior the norm, created a more sophisticated CX toolkit, and adopted practices that
helped define an experience that was truly unique.
To turn their aspirations into reality, companies must take their customer experience efforts from
ad hoc to mature. That means getting to a state where employees routinely perform the set of
practices required to design, implement, and manage customer experience in a disciplined way.
Phase 1: Repair
Before they set out to create experiences that delight customers, firms should first fix
experiences that pain customers. By doing that, customer experience leaders begin to change
the way their businesses operate. In these initial steps, they:
Identify Problematic Customer Experiences. To unearth customer pain points,
companies must start or expand customer listening programs. While some companies
treat this step as a one- time research project, most realize that it’s the start of a
continuous improvement process. The American Cancer Society (ACS) implemented a
customer experience measurement program that included a biweekly survey sent out to all
customers who interact with the company. ACS used the results of this survey to guide
business objectives for regional divisions. It also started sending voice of the customer
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alerts to event staff so that they could address any negative feedback in post-
event/interaction surveys. Barclaycard’s US division started analyzing every customer
complaint, which it defined as “any customer expression of dissatisfaction regardless of
channel, business line, or contact center.” And in 2008, leaders at Rosetta Stone began
gathering every piece of customer feedback — positive or negative — to find out what
people liked and didn’t like about the firm’s new online experience.
Prioritize Fixes. To avoid being overwhelmed by how much there is to fix, firms should
convene a cross-functional customer experience steering committee that decides where to
begin. For example, Barclaycard US began holding a monthly meeting called the
“Customer Accountability Forum” where the firm’s top brass prioritized the customer
agenda. Although many companies decide what to do based on instinct at this point, it’s
better to instill rigor from the start. For example, when Regions Bank formed its cross-
functional team (made up of key decision-makers and their lieutenants), the group’s first
order of business was to create a detailed system for ranking projects.
Coordinate Implementation. Cross-functional teams need to meet on an ongoing basis
to oversee the work they approve. At Barclaycard, execs use their monthly forum to work
through any roadblocks that may impede existing projects. Similarly, business and
technology leaders at Progressive Casualty Insurance gathered monthly throughout 2012
to work on projects like new policy and customer data platforms that now support a variety
of improvements to the firm’s end-to-end experience.
Measure Results. Customer experience professionals should look to the same
satisfaction, loyalty, and customer experience (CX) metrics they used to find problems in
the first place for evidence that they fixed those problems. Thanks to improvements in its
analytics systems, Cablevision is now able to detect pending problems before they turn
into an outage, significantly decreasing its volume of customer service calls. During the
first stage of its evolution, the UK’s Virgin Media streamlined its dashboards and
distributed a Balanced Scorecard to track Net Promoter Score (NPS) improvement on a
weekly basis.
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Phase 2: Elevate
Once they’ve learned what not to do, firms should prevent backsliding by adopting practices that
make good behavior the norm. CX professionals need to bring about that change by creating
systems to:
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Share Customer Insights Programmatically. Employees need consistent up-to-date
customer insights to help them make good decisions on an ongoing basis. The airline
Emirates created customer journey maps to give its multilingual workforce a shared sense
of the passenger experience. Blue Cross Blue Shield of Michigan built a traveling
“persona room” to give associates deep insight into the plan’s members. Courtyard by
Marriott created a training program that brings new hires up to speed on what the brand
already knows about guests. And Rosetta Stone started sending monthly reports of the
top customer rants and raves across webinars, calls, chats, surveys, online reviews,
Facebook, and Twitter.
Measure CX Quality More Thoughtfully and Consistently. In phase 2, measurement
programs need to go beyond simply picking up on causes of customer dissatisfaction.
They should start tracking progress toward delivering experiences that customers
ultimately want and need. Rogers Communications used primary research to pinpoint the
three things its customers want most and then adopted a single enterprise measurement
program that scores every touchpoint on those three criteria. Similarly, Edward Jones
identified five attributes that define “The Ideal Edward Jones Experience” and adjusted CX
metrics to match.
Integrate CX Into Core Business Processes. At this phase, CX professionals must
work to build customer-centric discipline into standard practices and procedures. AT&T
Mobility re- engineered its network planning process to consider customers’ attitudes
alongside technical concerns. Leaders also added human factors testing to the process
for evaluating new devices in order to make sure that the company picks ones that
customers will like. BMO Financial Group held a workshop with 75 human resources (HR)
professionals to go over the bank’s new CX strategy and discuss what they’d need to do
differently to support it. Blue Cross Blue Shield of Illinois brought employees responsible
for member communication in a range of departments into a cross-functional working
group to make sure that they craft a consistent, unified message in the future.
Reward Customer-Centric Behaviors Across the Enterprise. In most organizations,
frontline employees already have some part of their compensation or rewards tied to
customer metrics. To move up the CX maturity ladder, organizations need to expand
those types of reward systems to include back-office employees. For example, grocery
chain Kroger added a customer experience metric to its bonuses for senior leaders. Now
all employees in the company have an incentive to deliver a better customer experience,
not just the frontline employees.
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Phase 3: Optimize
Phases 1 and 2 reduce or eliminate bad experiences and make it far less likely that companies
will introduce new problems. Those efforts alone can take customer experience from poor to OK
and help keep it there. But to take customer experience from OK to good, companies need to
develop a more sophisticated CX toolkit. That’s why, in phase 3, customer experience leaders
should:
Model the Relationship Between CX and Business Results. The team at AT&T
Mobility had been tracking — and fixing — customer experience issues since 2008. It
moved up the maturity ladder by adopting a more rigorous approach to CX driver analysis.
To do that, CX and finance experts combined customer interaction data, NPS, and
financial metrics to create a model that shows which aspects of the customer experience
contribute most to things like revenue per user (RPU), cost of service, and churn.
Business leaders now know the factors that are most likely to create Detractors and,
perhaps more importantly, the factors that are most likely to create Promoters.
Build Strong Experience Design Practices. The experience design discipline helps
companies combine customer insights and business analysis into a plan that employees
execute. Most firms don’t have this discipline and may even need help to understand what
it is and how it differs from graphic design or product design. Those that need or want
help can engage an outside design firm, as Virgin America did for the redesign of its home
page. In contrast, Virgin Media chose to do some of its experience design in-house by co-
creating experiences with its customers, a CX design best practice.
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Sharpen Employees’ CX-Related Skills. Firms must adapt training programs so that
they tie directly to customer experience. Progressive Insurance added behavioral
analytics to help managers give contact center agents personalized coaching. Virgin
Media started cross-training employees to work outside of their areas of expertise during
peak times so that no customer has to wait too long for service. And some firms now use
empathy training to help employees connect with customers and each other on a more
emotional level. Cleveland Clinic put all 42,000 of its employees through empathy training
— even those who don’t work directly with patients. And Virgin Media now builds empathy
among its top 120 directors by requiring them to spend a week in a frontline job so that
they know what to do to make things easier for those serving customers every day.
Phase 4: Differentiate
By the end of phase 3, organizations have acquired the ability to consistently deliver a good
experience, detect when things go awry, and adjust accordingly. These skills are necessary but
not sufficient for differentiating on the basis of customer experience. To have a shot at creating
a true significant competitive advantage, firms need to adopt practices that:
Reveal Customers’ Unmet Needs. CX leaders can stand out from the crowd when they
use advanced research techniques to systematically mine for new types of insights. For
example, when Bertucci’s wanted to open a new restaurant called 2ovens, it hired
consultancy firm Continuum to help determine what its target customers were looking for
and visualize what this new restaurant would look like. Continuum got creative and made
mood boards that captured the essential vibe of 2oven’s target customers. By using these
mood boards as a guide, all internal Bertucci’s stakeholders were able to ensure that the
menu, dining space, and website aligned to provide the necessary vibe.
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Reframe Customers’ Problems. Early CX design projects tend to focus on creative
solutions to known problems. CX professionals can take design to the next level by
helping people step back and see problems in an even broader context Nike created a
whole new category with its Nike+ ecosystem by going beyond runners’ need for shoes to
their desire to become better athletes. Similarly, when utility company Southern Water
needed to install water meters in every home to comply with new regulations, leaders
didn’t limit their thinking to that one event. Instead, the company engaged service design
firm Ideo to craft an end-to-end experience that will achieve the UK’s broader goal for
switching to meters — getting residents to use less water. The experience they designed
begins with an awareness-building ad campaign months before meter installers come to a
neighborhood. It culminates with a completely redesigned bill that educates consumers
and gives them the option to phase in pay-for-use billing over a three-year period while
they learn to conserve.
Rethink the Entire Customer Experience Ecosystem. A truly differentiating customer
experience may require a company to operate in a drastically new way. CX professionals
can partner with business process colleagues to develop a business architecture that’s
based on customer journeys instead of internal processes. For example, USAA has
identified approximately 100 key experiences associated with customer journeys like
buying a car or preparing to deploy abroad, all of which have owners and cross-functional
teams held accountable for underlying processes. This approach helps the firm see
opportunities that firms with a more traditional product-centric focus aren’t likely to pick up
on.
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The Path To Customer Experience Maturity
7. What Is The Role Of Leadership In Customer Experience?
Customer experience efforts cannot be successful without a strong level of support and commitment from our executive team. Our leadership’s role is to enable the following dependencies for customer experience success:
a. Establish our company’s clarity of purpose in serving and supporting our customers’ lives
b. Without this, our customer experience efforts can be unfocused and may fall back to
operational execution of internally driven processes and priorities
c. Commit to our organizational transformation, resisting one-off tactics and silver bullets
d. Recognize and commit to the necessary human and financial resources
e. Actively holding our people accountable for our customer experience performance
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f. Enable the development of skills and processes for building our customer experience
competencies
g. Model the behavior people should follow
h. Play an active role in understanding and participating in the rigor of aligning our company
i. Steward the change of metrics, compensation and reward and recognition
j. Commit to the timeline required (3-5 years to get the work running smoothly, then ongoing
maintenance) and suspend the usual short-term expectations of immediate results to have
work take hold and yield results
8. How Do Surveys and Metrics Factor Into Customer Experience?
Customer experience is the perception that our customers have of their interactions with our company. So, the only way to fully understand our customer experience is by capturing feedback from our customers. That’s why many customer experience efforts include voice of the customer (VOC) programs. These programs collect, analyze, and take action based on our customer feedback.
Historically, much of the feedback from our customers has been garnered through surveys. We would typically survey our customers in two broad manners:
a. Periodically, to get our customers’ overall feedback about our company
b. Episodically, after an interaction, to understand how our customers feel about their recent
contact with our company
With improvements in text analytics applications, other companies augment their surveys with customer insights from unstructured and often unsolicited feedback in channels like social media, inbound emails, and call center notes and transcripts.
Most of our executives regularly review metrics like sales, market share, and profitability to gauge the performance of our organization. As we become more customer-centric, we recognize that tracking our customer feedback is also a critical component for judging our organization’s performance, especially as a gauge of the longer-term health of our business. That’s why we will develop a set of key customer feedback metrics from the data collected through our VOC programs. These metrics will allow us to set goals, track performance, and take actions to achieve our customer experience objectives.