Some years ago, Jake Sorofman - then of Gartner - reported that 89% of the top managers in the world’s largest companies considered
customer experience to be their primary differentiator. This belief has subsequently probably led many of them to think that their company is more customer-oriented than the competition. At the same time, it is quite normal that more than half of the respondents in a self-assessment rank their own performance better than that of the competitors. This is due to psychological mechanisms which the statisticians call “
optimism bias” and “
the overconfidence effect”.
Obviously, there cannot be more than 50% who have a better performance than the rest. But even if you bear this quite natural phenomenon in mind, the gap between the top managers’ and the customers’ perception of the company’s customer experiences is extraordinarily large. According to an
analysis made by Fred Reichheld, about 80% of the top managers have the opinion that their companies in particular create better customer experiences than the competitors. Regardless of optimism bias and overconfidence, this is a very high number. The alarming point, however, is that only a measly 8% of the customers agree with this perception.
All the companies with a large gap between top management and customer perception of the company’s customer focus would typically like to improve the customer experiences once they realise that there is a perception gap. Unfortunately, some companies jump the gun. They launch initiatives to increase customer focus based on their own assumptions of what is most effective. However, there is a risk that the managers do not know why the customers have the perception that the company is far less customer-oriented than the top managers believe themselves.
Make the diagnosis before writing the prescription
Drive is a positive thing, but it is always important to make the diagnosis before you choose your strategic initiatives. It is crucial to start by understanding why there is this gap, so that you can make your actions based on facts rather than your own guesswork. This could be done by quantitative and qualitative customer analysis and interviews of frontline employees.
Additionally, the company could work with three different approaches to create increased customer focus
- Strengthen the individual customer contact points.
- Turn customer experiences into a strategic theme.
- Apply a customer focused approach to strategy execution.
Acquiring a deep customer insight often helps identify which experiences the customers are most dissatisfied with, and how the most problematic customer contact points may be improved. This could for instance be within functions such as sales, marketing, customer service, IT and HR. These are some typical examples:
- Salespeople focus too little on existing customers (e.g. because all bonus is based on new sales).
- Marketing bases their campaigns on which products the company wishes to “push” into the market rather than looking at what the individual customers and segments actually need right now.
- Employees in customer service demonstrate too little empathy (e.g. because they are only measured on number of calls per hour and not on whether the call provides the most optimal customer experience).
Therefore, in this case, it is all about knowing and optimising each and every contact point. It is also important to ensure that the employees within each area are being measured by the right efforts.
Making CX strategic
The most problematic customer experiences typically occur because the customers have several unfortunate experiences on the total customer journey. It is problematic when the customers experience more than one critical incident, as more errors naturally are worse than one. The combination of bad customer experiences in different contact points may even create negative synergy like in this grotesque example, which nevertheless is a real life incident, at a telecoms company.
Within one single incident, the customer experienced that a service technician was late, entered the living room in dirty shoes, did not clean up after himself, was longer to install the solution than expected, did not properly assure its quality before he left and finished by urinating into the neighbouring garden from the customer’s carport.
At first, you are tempted to believe that it is exclusively due to an improper and incompetent behaviour by the service technician in this specific customer contact point. However, the reason for some of the unfortunate incidents may also be due to errors in the previous customer contact points. Maybe he was late because customer service had booked his appointments too closely or given him the wrong address, his car would not start or the required spare parts were not available. Urinating into the neighbour’s garden, however, will be difficult to blame on his colleagues.
The example shows that it is important to know the entire customer journey to be able to optimise the customers’ experience. This requires a systematic effort where you create an overview of the total customer journey to optimise it. The three most relevant methods are:
- NPS (Net Promoter Score) measurements of single transactions, customer journeys and the overall relation as well as closed customer feedback loops on an operational, tactical and strategic level.
- Customer journey mapping and service design.
- Ethnographic studies to identify “customer job to be done” and make ”outcome based innovation”.
You need to choose the right methods and tools based on the outcome of a strategic analysis. They should not be chosen based on which buzzwords are most popular at present, or what has worked in other companies.
Adopting a customer-focused approach to execution
No matter how customer focused your strategy is, you also need to continuously measure how the customers perceive their experiences with your company. In other words, it is not sufficient to assume that your strategy works.
The implementation of the strategy should take place in a customer focused and agile way. For instance, you may supplement traditional KPIs and bonus models with relevant, specific and customer centric KPIs (like NPS, customer retention,
customer lifetime value and the development in the existing customers’ revenue, profits and share of wallet). Similarly, the continuous adjustments and reprioritisations of the strategic efforts should be based on your factual knowledge of the customers, which should be updated constantly (e.g. by continuous NPS measurements). This way, you ensure an agile execution of the strategy, where you take into account the changes in customer needs, preferences and experiences that occur over time.
You will typically obtain the greatest effect by combining all of the three approaches above, but you should at least choose one of them, if you do not have organisational bandwidth to implement two or three at the same time. A good customer analysis will most often reveal which of the three approaches will have the greatest effect in the most cost-effective way.
You see, if you want to close the gap it is important that you take the first step to make your company more customer focused. And mind you, this should happen in such a way that your customers actually experience it too.
This article was adapted from a piece originally published on Borsen.dk.
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