Monday, September 30, 2013

The Case FOR Customer Experience as a Business Strategy

Being a Customer Experience (CX) professional and having studied and practiced the art and the science of this wonderful CX discipline for over nine years now, (all within one organization) I pause to reflect on what the net result is of all the hard and dedicated work that we CX professionals have accomplished thus far and what we are yet to accomplish. I’m reflecting and writing this latest blog on the eve of the very first Customer Experience Day (CX Day) declared so by the Customer Experience Professionals Association (CXPA) as the first Tuesday in October from this point forward.

Regardless of the gains we feel we have made, I’m still perplexed at how many organizations still seem to struggle so much with the idea that CX should be a key and critical element within their strategic business plan. Those organizations that hold the customer supreme in their business strategy have discovered that it really is all about the customer. Product and technology are often short-lived. Competitors can quickly outstrip a technical advantage in a matter of months or even weeks. How are B2B high-tech organizations able to keep pace with their high-tech competitors? Investment in Customer Experience is what some organizations have recently discovered and here are some key points just published by UK-based Syngro that make the case FOR Customer Experience as a strategy.

Gartner's latest research has highlighted that more than 50% of CEOs now rate Customer Experience Management as their number one strategic investment. Like any high growth market there is a lot of hype over what it can achieve but the key benefits of differentiating on customer experience are now unequivocal: 

Profitability: 76% of consumers would pay 5% more for a better experience - 53% would pay 10% more and 10% would pay 25% more - Accenture

Loyalty: Experience is a more powerful driver of loyalty than price - 55% cite CX as the main reason for loyalty in banking, 47% in retail - Forrester Banking & Retail Report

Equity: Over a 6 year period, CX leaders outperformed the S&P 500 index by 28%. Those who had poor CX performance lagged behind the index by almost 20% - Watermark Investment Consulting

Consistency: In the UK, a £100 investment in the National Consumer Satisfaction Index fund in 2007 would have by June 2011 returned £159 whilst the same investment in the FTSE 100 would have returned just £94. 

Efficiency: A one point increase in customer satisfaction (CSAT) has been proven to improve cash flow by 4% in major organizations - Journal of Marketing

Whether you are investing in CEM for the first time, or seeking to maximize the efficiency of your current program, there are some questions you simply must ask within your business, and be confident in the answers.

Key questions business leaders must ask to strengthen the CEM program:
  • How can we develop measures that improve both CX and profitability?
  • What must we do to ensure every employee knows their role in the Customer Experience program?
  • How is the aim of delighting our customers reflected in our commercial strategy? Is this reflected by senior management? 
  • In our reports to the City and investors, how confident are we that we can report customer experience with the same level of granularity and rigor as other topics? 
  • Can we honestly say that our CX program is more than a defect-reporting mechanism? Does it create learning in the business? 
  • Are we using customer insight to become proactive in becoming a better, more profitable company or are we stuck in a reactive loop? 
  • How big is the risk represented by the way we currently engage with customers? Why are some customers loyal while others leave in a blaze of apathy?

Monday, July 29, 2013

Customer Journey Mapping - A Powerful Organizational Transformational Tool

Organizations that intend to deliver an exceptional customer experience must first understand what the customer experiences at every touch-point and, most importantly, this needs to be articulated by the customers themselves.  It is tempting to shortcut the process by adopting simply an internal viewpoint of the customer experience as representative of the actual customer experience. This doesn’t quite provide the mirror that needs to be held up within organizations.  As the saying goes, “If you don’t know where you are heading, any road you choose will take you there.” 
With this in mind, I believe those businesses that understand exactly what their customer’s experiences are at every interaction have a decided competitive advantage.  This is fundamental to the success of just about any business, except perhaps government agencies.  Having said that, I do recall that the Registry of Motor Vehicles in the state of Massachusetts over the past ten years has completely transformed the way it serves customers—who have no choice in the matter when it comes to renewing a driver’s licence or an automobile registration.  It’s not just about meeting or exceeding customer expectations, it’s also about consistency and ease of doing business on the part of both provider and customer—leading to more efficient operations as well as cost containment for the business.
Whether a business offers a product or a service and whether those transactions occur online or in-person at the point of sale, every interaction serves as an opportunity to augment or diminish the relationship you have with that customer.  Earlier interactions in the customer journey can be the more critical—awareness, engagement, decision-making, and purchasing—but the later stages—supporting, enhancing, developing, committing, and repurchasing are the more sustaining and serve to build and ensure long-term revenues.
Organizations that have not thought about customer journey mapping, might want to begin by asking themselves a few questions.  They might ask, for example: what is our overall customer strategy? Or perhaps more fundamentally they might ask: do we have a customer strategy?   Assuming they have one, another question they might ask is: what is the intended customer experience we are striving for? And perhaps further: does everyone in the organization know our customer strategy as well as the intended customer experience at each interaction?  They may consider also asking: how well are we executing our customer strategy?  This latter answer must be drawn from the customer’s perspective.
I look at customer journey mapping from a holistic and systems perspective.  Customer interactions can happen at any and every level within any organization.  Any employee that interacts with a customer is a stakeholder in the process of the business. The corollary would be a business operating in silos where there isn’t a cohesive and coherent customer strategy and where the customer experience is left to chance.  In an increasingly competitive and global business environment, organizations cannot afford not to consider the risks associated with “customer experience by chance” versus “customer experience by design.”  Mapping, measuring, and improving the customer experience is one of the most logical, fundamental, and essential frameworks that can  ensure that an organization’s brand promise is well understood and wholeheartedly supported at every customer interaction.  It’s a system where the ownership of delivery on that brand promise is felt and shared by everyone across the organization.
Customer journey mapping is a totally customer-focused concept.  It puts the customer and the customer experience at the focal-point of business operations.  Superior customer experience has often been described as the last frontier of competitive differentiation. Technology is a competitive differentiator for the moment, at best a moving target—very soon outpaced and replaced by the next and latest technological “shiny object” and unable to sustain most businesses over the long-term.  Organizations that realize this, understand the transformational power that is contained within the customer experience.  Measuring and evaluating the customer experience at each step along the journey, is how organizations can release that power.  It allows organizations to fully understand and describe their current and future desired state, identify the gaps, prioritize actions, and deliver transformational solutions that drive business results.

Monday, July 1, 2013

I Can’t See the Forest—the Trees are in the Way

As a Bank of America (B of A) customer over the last 15 plus years, [and having arrived here more as the result of acquisition than by choice] I have been a loyal customer in the sense that I have stayed and have not migrated to another banking institution.  Call me a creature of habit, but nothing has yet driven me to defect from B of A.  Like Starbucks, my personal choice when I desire a cup of coffee, they are everywhere I go and they are consistent if nothing else.
No here’s where it gets interesting.  My bank account with B of A includes a checking account, a savings, account and a line of credit account—covering me in the event I overdraw from my checking account.  I have successfully managed to go paperless with both my checking and savings accounts—two out of three—so far so good.  However, my poor little line of credit account must be an exceptional case because I cannot seem to find any way to make this account go paperless.
Most of the time, whenever I overdraw on my checking account, I replenish it within hours if not days and bring it back to a zero balance.  Nonetheless, when any transaction occurs, I get a statement like the one shown below in Figure 1 with a zero balance and payment due of zero.  I also get a coupon showing a minimum payment due of—you guessed it—zero.

Figure 1.
After attempting to go paperless using the relevant features on the B of A on-line banking portal and calling them numerous times to ask for this to be set up as a paperless transaction, alas I must admit defeat.  There’s nothing they can apparently do to prevent me from receiving these economically and ecologically wasteful monthly statements—each time arriving with a zero balance.  I actually once sent them a check for $0.00 and signed it—seriously, and to see if might help.  I don’t think B of A caught on to my frustration or my sense of humor.  I wonder whether this is endemic to only large bureaucratic organizations where it is often impossible to connect with a live human being to discuss customer issues in a logical common sense manner.  I can’t be the only B of A customer experiencing this.
For those of you working within large B2C organizations like B of A, does any of this begin to ring true? 
·         What channels of customer issue resolution do you have set up and offer your customers? 
·         Do they experience human avoidance by going though the looping phone tree that deposits you (pun intended in this case) right back where you started? 
·         Do your processes defy logic and common sense? 
·         Do you design your internal systems and processes around employee efficiency, organizational convenience, and workflow over customer expectations and ease of doing business?  
·         How does what I describe here help or hinder customer loyalty and customer advocacy? 
I’d like to hear similar stories from those of you either in B2C or B2B organizations where issues like this seem to go un-resolvable for years.  Just in case you might be wondering, I am not about to close my account with B of A and go elsewhere.  The rest of the experience I have with them is generally good, so this isn’t what I’d consider a show-stopper.  It would probably behoove B of A to save the costs of invoicing me and countless other customers for essentially nothing—not to mention the saving of few more precious trees in the process. 

Monday, June 17, 2013

Quality and Consistency Wins Business and Drives Revenues

I like pizza.  I think I’m among a majority of people who do.  And, pizza I would say is as much a commodity as coffee—although people certainly have their preferences and favorites for sure.  While I’m not here to debate the nutritional merits of pizza, I will admit that I have this craving I must satisfy every couple of weeks.  Therefore, pizza has been a regular element of my diet.  I don’t share this very readily or very often with my nutritionist.  I figure as long as I also consume my requisite daily intake of fruits, vegetables, and whole grains, I’m in good accord.  Besides, pizza crust could be whole-grain, tomato is a fruit, and I’ll often have a veggie pizza.  So, in essence, pizza may be my best nutritional choice, every day…!!  But, I digress.
I’ll use my love of pizza to make a point about quality, consistency and the customer experience and tie that experience directly into business outcomes.  I live in the Boston area where, in the southeastern part of the state at least, “bar pizza” seems to have been born many years ago and still thrives.  Some call it Greek style pizza but it’s those small round ten-inch thin crust versions where there is no discernible crust roll around the perimeter.  Most of the time, these are only available at local taverns or, as they call them here in the Boston area, “baahs.” 
The closest “baah” pizza to me is located in Quincy, MA where I live and is about 10 minutes from my home. Let’s call this Pizza Bar A.  I was fairly attached to Pizza Bar A for about seven years straight—typically getting my pizza a couple of times a month as take-out, since it was so close to home.  Then I began to experience differences (and a degradation) in quality that depended perhaps on who was cooking that night, how busy they were, and what ingredients they were using, etc.  You really have to work hard to make pizza not enjoyable, but somehow they were mastering the art. Once it got to the point where pizza from Pizza Bar A was only enjoyable half of the time, my wife and I decided to look around.   
Our alternative source was found in a town about 45 minutes from my home.  Let’s call this one Pizza Bar B.  So, rather than going there for take-out and arriving home with a cold pizza needing to be reheated, we decided we would just eat-in.  Naturally, eating-in leads to ordering appetizers, drinks, and dessert.  Think up-sell.  Over time, for about a year now, we are finding that Pizza Bar B offers quality pizza that matches Pizza Bar A at its very best and, but more importantly, a consistent product that is unmatched, even though it cost a lot more.  Plus, the service is fast, efficient and just as consistent as the product.  They earn a 10 on the 0 through 10 rating scale from both of us for both quality and consistent products and quality and consistent services.
Now, let’s analyze the simple economics of this situation to see who wins in the long run.    The cost of a pizza at Pizza Bar A is $8 per unit while cost of pizza at Pizza Bar B for the same kind of pizza with the same toppings is $12 per unit, regardless as to whether this is take-out or eat-in.  Because we are eating in at Pizza Bar B, we are also spending a lot more because we are also purchasing beverages and appetizers.
Visits / Year
Spend / Visit
Yearly Spend
Pizza Bar A
Pizza Bar B

Let’s also add the travel and time component to this analysis as well.  Pizza Bar B is 24 miles away whereas Pizza Bar A is only 6 miles away.  That difference of 18 miles is costing me an extra two gallons of fuel [at $3.50/ gallon] which is adding another $168 to my annual spend just getting there and home.  I’ll not include the cost of my personal time other than to mention that this would be a factor when you extrapolate this to any normal business situation. 
So there you have it.  The bottom line is this.  I will pay over 2.5 times more each year for a quality and consistent pizza experience—satisfying my desire for good pizza—value is king.   And I’m just one customer.  Pizza Bar B has a fairly large capacity and has been in business since 1955.  I’m now a promoter of Pizza Bar B and I highly recommend them to all of my friends and colleagues—even the ones that, like me, that were dedicated to Pizza Bar A.  So, imagine that some of them, let’s say a dozen of them, defect and start going to Pizza Bar B.  That means that Pizza Bar A could be losing somewhere in the vicinity of $15,000 in annual revenues just based on my experience and defection plus that of a dozen friends of mine to which I have spread the word.
Consider the very business you are in—whether B2B orB2C.  How consistent is your product, your delivery, your service and support, your service recovery, and your overall customer experience?  Are you even measuring those touch-points on a regular and consistent basis?  Is quality and consistency part of your organization’s experience design thinking?   How committed is your organization to quality and consistency at every customer interaction?  These are questions worth considering for any business and from a systems perspective, especially as they relate to organizational profitability, business continuity and sustainment, and future growth.