More steps to successful customer experience managementby
In the second part of his 10-step guide to successfully implementing customer experience management, Shaun Smith looks at how to deliver the customer promise at every touch point and measure the results effectively.
Execution is the hardest part of creating a customer experience because in order to deploy successfully, employees have to be mobilised at all levels and align competing agendas, functions and executives.
In the first part of 10 steps to making customer experience management work, our research showed that 55% of executives feel they have 'defined a brand promise that differentiates us in the eyes of our target customers'. But fewer have mapped the customer touchline to determine the key points of contact customers and how the brand promise should be delivered at each. So what are the next steps to making this happen?
Delivering the promise at every touch point
In response to the statement ‘We have identified how to improve our services and processes to deliver our customer promise in a way that is consistently valuable to target customers’, 41% of executives agreed achieving a mean score of 5.8 on the 10 point scale, indicating that this is a significant opportunity for many organisations. Without a rigorous process for mapping the customer touchline and designing the experience to deliver the promise, the danger is that an expectation will be raised that you cannot deliver.
Stelios Haji-Ioannou, chairman of easyGroup and founder of easyJet, makes this clear by saying: "You can spend £15m on advertising, go bankrupt and your name can still mean nothing to people. Your brand is created out of customer contact and the experience your customers have of you." For example, in a blaze of publicity in September 2003, UK-based bank Abbey National launched a £11m branding campaign intended to 'turn banking on its head'. The bank’s 700 or so branches were rebranded with a new, softer image and new advertising was launched, promising customers that "Abbey's straightforward attitude and simplified accounts will help you get on top of your money".
Unfortunately, the bank did not seem able to get on top of its own. It reported losses of £686m for the year ending 31 December 2003, in a year when most of its competitors reported record profits. It also failed to communicate the new strategy to its employees or put in place the new behaviours necessary to execute it. Consequently, it lost the confidence of its people and, as a result, the brand experienced staff turnover 17% higher than the industry average. Abbey was acquired by Banco Santander Central Hispano, the Spanish bank that has since rebranded it once again.
Providing branded training to ensure that employees understand the brand story
Many organisations provide customer service training, yet few differentiate in the service they provide. The reason is that ‘vanilla’ training creates ‘vanilla’ service. This is not to say that all generic service training is bad - it is not. In fact, there are some very good off-the-shelf programmes that really help to improve customer-facing skills and make service more consistent. But if your goal is to differentiate from competitors, this requires ‘branded training' - in other words, training that is designed to bring to life the values of your brand in a way that is consistent, intentional, differentiated and valuable. Most importantly, it has to start at the top.
Some years ago, mobile phone company Orange launched its famous campaign: 'The future's bright, the future's Orange'. The firm wanted to differentiate on the basis of the customer experience, rather than product functionality or price. As a result, it launched a series of roadshows that set out to bring the brand to life for employees. They were taught the profiles of their target customers, what these consumers wanted, the brand values and the kind of experience that would deliver them. Orange redefined the mobile phone market and opened it up to many new consumers who were intimidated by the new technology.
As we would expect, the larger the company, the more resources it is likely to devote to proper training. Our survey found that in those companies with less than €1.3m turnover, 51% of respondents disagreed with the statement ‘We have created training to equip our employees to deliver the customer experience’, whilst only 26% agreed. In larger companies enjoying turnovers in excess of €130m, nearly twice as many respondents (44%) agreed.
A key ingredient of training is to build executives into the process so that they have an active role in cascading the message. This would seem to be true in the Polish market because we found a high correlation between satisfaction with training and the statements ‘We have continuing internal communications to build clarity and commitment around implementing the customer experience’ and ‘Our leaders have been trained as champions of our customer experience and are leading its implementation’.
Designing CEM before installing CRM systems
At the peak of CRM hype, expenditure on CRM systems was estimated to have increased between $20bn in 2001 to $46bn in 2004. Yet, one survey by Gartner research estimated that 55% of CRM systems drove customers away and diluted earnings. This is because most CRM systems are installed without any thought as to how they will be used to add value for the customer.
These powerful systems allow companies to collect knowledge about the customer that can be used to offer them products and services tuned to their particular needs and preferences. However, for many customers the acronym ‘CRM’ stands for 'constantly receiving mailshots' since many organisations (and banks are the worst) use them as a blunt instrument to stalk, rather than woo the customer through junk mail.
Some software providers are now designing their products to support the customer experience and build CEM functionality into their call-centre products so that the agent is provided with all the information, tools and measures necessary to deliver the desired experience. Speaking at a 2008 CRM Summit in London, Gartner Research Group vice president Ed Thompson said: "In terms of the user experience, perhaps only 4% of customers can demonstrate a genuine return on investment from CRM initiatives, mainly because most companies fail to benchmark projects and real success stories tend to be anecdotal." This takes us to our next tip for deployment.
Measuring the customer experience
Business guru Peter Drucker's maxim that 'what gets measured gets managed' is still true today. Yet, most organisations focus exclusively on end results measures. Market share, profitability and earnings-per-share growth are all vital measures of business performance but they are all lagging indicators. They are a result of differentiation, customer loyalty and brand preference.
The answer is to move up-stream and measure and manage those activities that deliver the required customer experience and drive customer advocacy. However, over 51% of the executives we surveyed reported that their organisation did not have a scorecard to measure the customer experience. The mean score for the statement ‘We have a scorecard of indicators that provide leaders with objective and timely feedback on how well we are delivering against our promise’ was the lowest achieved in the survey, scoring just 4.6 on our 10-point scale.
CEO Andy Taylor and his team at US-based Enterprise Rent-A-Car only focus on one thing: the number of customers who give the highest rating for satisfaction and are willing to recommend the company to others. Frederick F. Reichheld, director emeritus of Bain & Company and author of 'Loyalty Rules!' calls these enthusiasts 'promoters' and by deducting the percentage of customers who say that they are unlikely to recommend, he calculates a Net Promoter Score. Enterprise enjoys both the highest rate of growth and, at near 35%, the highest Net Promoter percentage in the car rental industry, according to Reichheld. World-class organisations like Amazon.com have net-promoter scores of 75-80%.
Reichheld has been challenged on his one number approach and some academics have doubted the Net Promoter index as being suitable for all businesses. Our own view is that measuring customer advocacy is one of the most important, but not the only metric in a company's customer experience scorecard. However, what is important is to reward the key performance indicators (KPIs) that you want to move. And that takes us to our last point.
Aligning KPI’s with the customer experience
One of the lowest scoring items in our survey was ‘Leaders measure and monitor the quality of the customer experience’ - as many respondents disagreed with this statement as agreed with it. This poor result was reinforced by the fact that only 47% of respondents agreed with the statement: ‘Our leaders reward employees who put customers first’. The fact is, unless there is a link between the desired business results, the customer experience necessary to achieve it and appropriate measurement and rewards, it is unlikely to happen.
Waterstone’s, one of Europe’s largest book retailers, is currently training all of the 'colleagues' in its 340 stores using a series of special training modules built into the rhythm of the operation and delivered by store and departmental managers. Each of the modules focuses on delivery of Waterstone's customer promise, desired customer experience and the behaviours necessary to bring it alive. Colleagues are taught to focus on a simple but powerful KPI: The power of one. This is the economic impact if each bookseller sells just one more book each day to their target customers.
The new behaviours are measured and reinforced by aligning its mystery shopper survey with the new customer experience and feeding back the results to the frontline on a regular basis. As a result, Waterstone's has seen its like-for-like sales performance increase by nearly 4.5% over the last year, having experienced flat growth for the previous three. This has resulted in a large revenue increase and a significant return on investment.
Interestingly, one of the organisations most frequently mentioned by survey respondents as offering a good customer experience in the Polish market is EMPiK, also a book retailer. It, too, has adopted some of the principles we have described. You will have seen that many of these best practices are inter-connected.
Brands are holistic and so senior leaders must manage the customer experience accordingly, understanding that each element either reinforces or dilutes value to the customer. These are the companies who make CEM work and enjoy the business results that flow from this. Our research seems to indicate that whilst there is tremendous enthusiasm in the Polish market for CEM, many companies are in danger of learning some of the same lessons that US and UK companies have found out the hard way. We hope that these best practice lessons will make this process less painful