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Seven rules for redefining customer experience

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15th Sep 2008
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Recent market research shows that only 8% of customers describe their experience as "superior", and that 59% would leave after just a single bad experience. Ryan Pellet outlines seven fundamental rules to help firms deliver a satisfying customer experience.

Seven

By Ryan Pellet, Convergys Corporation

In a market characterised by ever-changing customer demand, it is no longer sufficient for companies to compete based on the 'four Ps' of product, price, place and promotion. Success hinges on the ability to deliver the right experience to keep customers satisfied, loyal and profitable to the company. One approach gaining momentum is 'relationship management'.

Companies have long recognised the strategic value of customer relationships. But turning this concept into practical business actions – and bottom-line results – can be difficult, frustrating and disappointing. For years, companies have made significant investments in customer-oriented initiatives. And the response from customers? Recent market research shows that only 8% of customers describe their experience as "superior", and that 59% would leave after just a single bad experience.

Companies know they need to take action. Many are re-thinking their approach to customers by embracing the proven success of relationship management, which provides a range of sophisticated processes and tools to effectively shape the customer experience. In taking advantage of these evolving approaches, newcomers should consider seven fundamental rules.

  1. Rule #1: Create a customer experience strategy

    Companies should develop an overall customer strategy that determines who they will serve and the type of customer experience that will support the company’s brand and its overall business strategy. The strategy should include creating an empowered workforce to interact with customers, processes that are proactive and focused on customer needs, and technology that drives automation and effectiveness as well as superior experience.

    The strategy should focus on interactions that create value for customer and company alike. A key element in customer management is the value creation process – ensuring that you achieve an appropriate balance between the effort you put into creating value for the customer and the value you get back from the customer. When done right, those can be one and the same thing. For example, companies that use predictive selling to make individualized up-sell offers typically find that the practice actually increases customer satisfaction, because the customer perceives the focused offer as being valuable to him or her. In essence, selling is viewed as a kind of service. Companies should also understand the lifetime value of various customers and treat them accordingly.

  2. Rule #2: Empower the customer-focused workforce

    Companies can establish incentives and compensation that encourage the creation of customer value, rather than just efficiency and low costs. In addition, many organisations can benefit from the integration of HR data from various locations so that executives can manage talent from a holistic point of view. This is clearly an area of opportunity: Convergys research shows that 63% of surveyed companies do not have an inventory of available skills - which limits the ability to match talent with customer needs.

    With an integrated, centralised view of the workforce, companies are better able to draw on a seamless pool of skills and strengths to match the right work with the right talent and better meet customer needs. In addition, studies have shown that if the workforce is well trained, there is less attrition, increased productivity and greater customer loyalty. So customer relationship management, in effect, begins with your employees.

  3. Rule #3: Automate for efficiency and customer satisfaction

    Low costs and high service levels have traditionally been conflicting goals, but today’s systems let companies have both. Web, email, IVR systems, speech recognition and other advanced technologies can be used to let customers serve themselves through the channel of their choice at relatively low cost.

    Automated systems can also work in concert with frontline employees. Voice systems, for example, can be used to enable contact centre agents to navigate quickly through screens using spoken commands. Such technologies are driving a front-office revolution leveraging innovative combinations of machines and people to re-engineer customer interaction and deliver savings and new revenue.

  4. Rule #4: Provide anywhere/anytime/anyhow access

    Today’s customers typically interact with a company through a variety of channels, from stores to call centres to the web. To effectively manage that experience, companies need to integrate information, processes and policies across channels so that the customer’s 'story' follows him or her.

    The benefits of such integration can be significant: When a national US retailer took steps to ensure the integration of online and telephone sales, the result was an increase in the sales conversion rate of more than 200% and a customer satisfaction score of 4.5 on a 5.0 scale.

  5. Rule #5: Make it personal

    Companies can use data warehousing and analytics technologies to create a centralised 'single view of the customer' and use that to tailor interactions to individual customers in real time. For example, 'predictive up-selling' draws on customer data to target additional products and services to specific customers. When a customer calls the company, systems quickly identify the caller and analyze information about the customer and the company’s current offerings. The software then gauges that customer’s likelihood of buying, determines what best fits his or her situation and routes that recommendation to the frontline employee within moments. In essence, the company is treating each customer as a market of one.

  6. Rule #6: Enable proactive customer interactions

    Customers like to feel that a company is working with their benefit in mind. A clear way to demonstrate that is to move beyond simply waiting for customers to raise service or product issues. The effective combination of analytics, workflow systems and integrated information from front- and back-office systems can enable companies to reach out with a solution before the customer contacts the company. For example, if a system detects a shipping delay on an order, it could flag the issue for frontline employees, email the customer about the problem, or even trigger a rebate or future discount. Proactive service can help turn what would have traditionally been an unpleasant situation into a positive customer experience.

  7. Rule #7: Measure and monitor for continuous improvement

    Companies can create feedback loops to keep interactions in sync with the customer. In contact centres, for example, systems can track near real-time customer-satisfaction information, allowing individual agents to quickly adjust their approach to customers. Companies can also turn call centres into 'customer listening posts' that drive the voice of the customer into the company.

    By combining customer data with relevant information on other parts of the company, companies might find that repeated customer issues can be traced to specific upstream processes. For example, when a major retailer saw an increase in customer complaints surrounding shipments, it correlated data from its contact centre interactions with enterprise resource planning and fulfilment data. The analysis showed that out of six warehouse vendors being used, a single company that handled just 3% of the retailer’s shipments was causing 27% of the shipping complaints.

Driving the change

Effective management of the customer experience involves not only technology but also the people and processes that use that technology. Often, it also involves significant change that can reach across much of the company. Executives need to be prepared not only to formulate the customer experience strategy, but also to support the execution of that strategy – and drive the changes it requires.

With the increasing importance of relationship management, and the ever-growing challenge of meeting customer expectation, the ability to manage the customer experience is critical. With a clear strategy and a solid grasp of the basic rules of customer management, companies can be in position to ensure that they are shaping interactions that drive loyalty and profitability, and making the right investments in that most vital of business assets – the customer.

Ryan Pellet is vice president of global consulting services at Convergys Corporation.

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