DHL Freight undertook a comprehensive and programmatic overhaul of its customer experience. Here we explore the steps it took and what other businesses can learn from its work.
Much has been written about the emergence of customer experience as a key competitive battleground for businesses - a Gartner survey of marketing leaders, for instance, found that nearly 90% believe that customer experience is becoming a major basis for competitive differentiation.
For some industries, customer experience could be the single biggest differentiator in their sector, particularly in those markets where the products or services have become commoditised. The road freight business is just such a sector – and it is for this reason that DHL Freight developed a customer experience programme, the byproduct of which has been a maturity model that has since been adopted by other major organisations.
In our CX maturity model series, MyCustomer examines the work of DHL Freight to overhaul its customer experience, the principles on which its CX programme is built, and the minutiae of its maturity model so that you too can adopt the framework to guide the development of your own organisation’s CX programme. In this first part, we take a look at the history of DHL Freight’s customer experience management programme, and what we can learn from it.
Background
One of the leading providers of international road transportation solutions in Europe and beyond, DHL Freight was all too aware of the fact that the industry had become highly commoditised and price-driven, but when it conducted a survey of 700 road freight customers in 2013, the findings presented a stark picture of the market.
70% of respondents that used multiple providers reported that they were indifferent about them, perceiving that they offered more or less the same services for similar value. With little emotional engagement between customer and provider – as the relationship primarily revolves around service quality and price – there is little sense of loyalty and customers frequently switch providers. Because of this, businesses tend to compete primarily on price, leading to yield erosion for the providers.
It was a bleak picture. But there was a chink of light. As part of the customer survey, customers were asked to rate the importance of various attributes. While quality and price were rated highly, as expected, customers also rated ease of contact, quick action and having a knowledgeable staff as equal to or more important than those two factors. This indicated that for customers, quality was not only about operations (i.e. delivery) but also service support.
To make customers happy nowadays you need to do more than just sell good quality products and services at a fair price. In the logistics business this means that being easy to do business with, acting quickly and providing more personalised care have become equally important attributes of success.
“The demands and expectations of customers in all industries and across the world are rising,” says Kim MacGillavry, who was the VP of customer experience at DHL Freight, during its CX transformation. “This trend is fueled by technology-driven consumerism, subdued economic growth and large spread commoditisation of products and services. To make customers happy nowadays you need to do more than just sell good quality products and services at a fair price. In the logistics business this means that being easy to do business with, acting quickly and providing more personalised care have become equally important attributes of success.”
The survey demonstrated that there was a more complex relationship between company and customer than expected, and DHL Freight understood that improving the overall customer experience could therefore provide competitive differentiation, which if managed well would reduce customer churn and increase positive word-of-mouth to drive new business. This would, however, necessitate a shift in company culture to become more customer-centric across departments and locations from management to the shop floor – something that required a fundamental change.
“Managing the customer experience is not something that concerns only the frontline employees and it can’t be delegated to a particular department,” notes MacGillavry. “When doing business with a logistics company, customers interact with a lot of different people. The experience customers have when working with a logistics company is therefore determined by all these interactions and the impressions they leave the customers put together. It requires new structures, processes and systems that transform a company. It can’t be expected to happen without making structural changes.
“In this context we put in place a customer experience department that is managed as a line function from the management board down to the branches. In our case there are two components to this. One is to design and implement a customer experience management programme across the entire organisation and the other is to build a customer service department that sits alongside other core functions such as operations, finance and sales.”
The management board subsequently identified five goals to drive the change necessary to improve customer experience and ramp up loyalty.
- Define a clear, compelling vision, common purpose, and value proposition for DHL Freight.
- Define the DHL Freight customer journeys and determine what matters most to customers.
- Ensure continuous improvement of those customer journeys.
- Engage the entire organisation to provide high quality customer service.
- Create a performance management system with defined metrics.
The vision
Agreement on a common purpose statement was considered essential to the project, to guide the behavior of the employees and the decision-making processes throughout the company. At the same time, a value proposition was developed to define and describe the benefits the company promised to its customers, and that would set it apart from its competitors.
We converted the leadership teams to ensure they adopted and embodied the cultural and brand values.
“Firstly, we developed a clear vision for the company using the Business Transformation Management Methodology of SAP as well as the brand values that are compelling to customers and the cultural values that define us,” says MacGillavry. “This is a process that involved talking extensively to customers and employees. It is not easy to come to a complete consensus at board level on who you are, what you do and how you do it. However, without being clear about these fundamentals and without agreeing on it any further steps will be fruitless.”
The leadership teams undertook extensive training to ensure they were well acquainted with the principles of customer experience management, including a session with the Disney Institute, the business insights and advisory segment of The Walt Disney Company. To support mindset and behavioural change, managers received classroom training about the company’s brand and cultural values as well as the leadership traits that management is expected to live by.
MacGillavry notes: “We converted the leadership teams to ensure they adopted and embodied these cultural and brand values. That involved a lot of classroom training, coaching and practice using tools such as Net Promoter Score (NPS) follow-up calls with customers.”
Understanding the customer journey and improving it
In order to improve the customer experience, DHL Freight decided that it needed to have a clear picture of the customer journey, so that it could understand the different steps the shipper undertakes when doing business with a road freight company, and the challenges and experiences that they the shipper encounters.
After conducting customer workshops, DHL Freight was able to identify different customer journeys and customer emotions and thoughts during each phase of the journey and overall relationship with the company. In parallel, the exercise was repeated with employees in order to mirror the customer journey from an internal perspective. This helped to build awareness for the customer journey among employees across different departments while helping to explain pain points.
DHL Freight was able to identify different customer journeys and customer emotions and thoughts during each phase of the journey and overall relationship with the company.
These insights enabled DHL Freight to identify any friction in the customer journey, and what an ideal customer journey could look like, thereby defining the ideal customer experience. This process allowed the company to identify which departments and employees were most influential to the customer experience at each step.
Having captured customer feedback as part of the project, DHL Freight management also acknowledged the importance of implementing an ongoing programme for capturing the Voice of the Customer, in order to engage leadership with customers and foster a customer-centric mindset, but also to ensure a system of continuous improvement, identifying areas for improvement and changing customer needs and expectations.
Various customer dialogue platforms were set up, ranging from NPS follow-up calls to customer dinners.
Employee engagement
Analysis of preliminary Net Promoter Scores from customers and employees highlighted a significant pattern – units with the highest levels of employee dissatisfaction were also those where customers reported highest dissatisfaction. Concluding that a substantial improvement in customer experience was unlikely to be achieved unless the needs of its employees were addressed, DHL Freight embarked on a programme designed to improve employee engagement.
The main pillars of this effort were:
- Improve staff cohesiveness and alignment. Encouraging better collaboration and communication between staff and ensuring that all employees’ opinions matter to provide a common purpose that everyone can rally around.
- Define the company culture. DHL Freight defined the company culture with four key words: pride, passion, power and pace. To reinforce this message, the company developed materials that reflected the culture, for instance replacing the traditional management board picture with one featuring the management team in denim, with DHL tattoo-style emblems sewn onto their jackets, surrounded by Harley Davidson motorbikes. The DHL Freight emblem was publicised throughout the company and collateral is highly sought after by employees.
- Improve leaders’ people management skills. Ensuring that managers empower employees to do what they do best, regularly talking to staff about their progress, and encouraging their development. The management teams undertook training on the ‘leadership must-dos’ – inspire, listen, involve, lead and celebrate – designed to help leaders enforce customer-centricity in the workplace. The management teams also received training on the Employee Net Promoter Approach aimed at increasing employee well-being, happiness and engagement at work.
- Engage the staff. Employees were encouraged to share stories about how they delighted customers and how other team members helped them. The best stories were published throughout the organisation, with staff singled out for awards and gifts. Customers were also given the opportunity to praise individual staff via surveys. MacGillavry notes: “We cascaded the principles to all employees. Again classroom training for all employees and training for third parties that also represent the brand were instrumental to change mindsets. This was accompanied by things like the employee Net Promoter Approach as well as various engagement initiatives such as storytelling and flash mob campaigns.”
Performance management
After all of the above was in place, work started on the more comprehensive measures that require structural changes in the organisation. Most companies have not developed and designed their customer-centric processes with the same rigour as the finance, sales and operational processes. Doing so is critical in order to measure a company’s performance from the customer rather than from an internal perspective.
Very often the tools necessary to collect the relevant customer data that needs to be measured and managed or to aggregate them from legacy systems are not in place. As a result, investments in tools to capture, report and analyse the customer experience are inevitable. Given the cost involved in this, as well as the organisational change required to implement these tools, this step is unlikely to be successful without strong leadership and dedication of the employees.
Most companies have not developed and designed their customer-centric processes with the same rigour as the finance, sales and operational processes.
MacGillavry adds: “The customer experience department worked out the customer-centric processes that sit alongside the operations, finance and sales processes that are already defined and well managed. As these processes following a customer journey logic that cuts through the organisation and its departments it is no surprise that they are not defined, measured and therefore managed in most companies.
“As a final step, we developed the tools needed to manage these customer processes along the end-to-end journey. There were, in total, five systems that needed to be developed and implemented at the same time. To create a complete and real-time transparency they are integrated into one platform. Although it seems logical to jump straight to IT as the solution to make the organisation more customer-centric we decided to make that step last given the implications it has for the organisation and the people. When we started we gave ourselves three to five years to get there and that turns out to have been a pretty good estimate.”
The outcome
Although DHL Freight only began rolling out its CEM programme at the end of 2013, in two pilot countries (with other countries following after in 2014), the impact within the first 12 months included improved customer dialogues, a change in organisational mindset and improved ways of addressing issues. Since then, the impact has become more profound.
MacGillavry explains: “There has been a huge increase in awareness of and shift in belief regarding CEM. The idea was completely new and even alien to many that intuitively believed that operational quality and price were the only things that mattered. In the meantime, I would say everyone has been converted. People are clear about the brand that is shared across the whole organisation. Customers are getting access to country managers they did not have before and many members of the country management teams are addressing customer feedback personally.”
People are clear about the brand that is shared across the whole organisation.
And while it is difficult to estimate a return on investment of the project at this point, MacGillavry is confident that it has heralded a significant new era for the business.
“Often companies want to calculate the ROI on CEM initiatives before they get started although the impact on the P&L is impossible to establish at such an early stage. Frankly speaking, if management insists on a business case that shows short-term financial benefits then the company is not ready for CEM,” he explains.
“Speaking from my own experiences, changing the mindset and culture of the company has opened the door for making far-reaching changes in the organisation that are needed to create more customer-centric structures. It has allowed for investments in people and systems that would have otherwise never have gotten off of powerpoint slides. Meanwhile, there is nobody that blocks or even questions any CEM-related investments. Once all the systems and tools are in place across all countries a new chapter will get started where customer data analytics will create a continuous, real-time 360 view of the customer that will allow us to manage customer relationships like never before.”
Lessons for other organisations
MacGillavry and Wilson summarised the following recommendations based on the experiences of DHL Freight:
- CEM is not a project, but an ongoing process.
- Your common purpose and value proposition need to drive everything you do.
- Align the leadership team before getting started.
- Everyone needs to take part.
- Look at your company from the viewpoint of the customer, and not at the customer from the viewpoint of your company.
- The voice of the employee is as important as the voice of the customer.
- Don’t get hung up on scores.
MacGillavry adds: “There are a few prerequisites for a successful CEM programme. First, you need to have the full backing of your CEO and the rest of the management board. Secondly, you need to make sure everyone in the organisation has a customer-centric mindset and behaviour.
“For this to happen, you need a high degree of employee engagement. Note that just feeding employee customer data and management instructing them to act on that data is not the way to create a customer centric mindset and behaviour in the organisation. What makes employees happy at work are things like encouraging their development, making their opinions count and getting recognition and praise. Focus on these things and that will automatically lead to a more customer-centric mindset of your people.
“Finally, you need a high degree of collaboration across the teams and departments in the company. Nobody can do their job in isolation of everyone else. Too often employees are very task-oriented and measure their success against that narrow scope. To make customers happy a string of people along the frontline and behind the front line need to do their job equally well. If people don’t work well together they can’t do their job properly and won’t be able to satisfy customers.”
In the rest of the series we examine how DHL Freight built a CEM Maturity model to measure the development of its customer experience management programme; how other businesses have since adopted the model; and how you can use the model at your own organisation.
