CUSTOMER EXPERIENCE MANAGEMENT: STRATEGIES TO SUCCEED

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C

USTOMER

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XPERIENCE

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ANAGEMENT

:

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TRATEGIES TO

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UCCEED

WRITTEN BY:SUMAIR DUTTA,CHIEF CUSTOMER OFFICER JANUARY 2014

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SUMMARY

Customer Experience Management (CEM) is more than Customer Feedback Management. Quite often the two terms are used interchangeably and this presents an incomplete definition of CEM. The Service Council (TSC) recently undertook a comprehensive research campaign to study CEM initiatives across 180 total organizations. The intent of this campaign was to learn about the structure of CEM programs, the resources dedicated to customer experience, and the results seen from successful CEM initiatives. The research was split into three areas:

- CEM Program Structure and Strategy - Multi-Channel Engagement

- Voice of the Customer

In this paper, we will share some of the key findings around CEM program structure and strategy. This paper will also feature best practices shared by organizations that have been able to drive the most out of their CEM initiatives. For access to data and insights around multi-channel engagement and Voice of the Customer, please visit our research page on www.theservicecouncil.com

DEFINING CUSTOMER EXPERIENCE MANAGEMENT

Sixty-five percent (65%) of organizations polled by TSC indicate having a formal CEM initiative or program in place. The remaining 35% either aren’t focused on CEM or don’t have a formal initiative in place. Thirty-six percent (36%) of organizations have had their CEM initiative in place for more than four years, which confirms that CEM as a whole is not a new concept.

- 65% of organizations have a formal CEM program in place

- Executive support and culture are identified as the most critical factors in determining CEM success

- Areas such as customer journey mapping and channel engagement strategy are not a part of CEM initiatives for a majority of organizations.

- 100% of leading organizations hold their executives

accountable for CEM-related goals.

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Source: The Service Council, CEM Strategy, Q4 2013

However, the definition of CEM varies across organizations. Many still see CEM as another term for their Voice of the Customer activities. Others see it as a broader program that looks to understand and manage all customer touch points in order to offer a differentiated experience throughout the customer journey. As such, CEM not only covers traditional areas of service, sales, and marketing, but also delves into the product experience, the transaction experience and the information experience. Putting it simply, CEM programs are all about understanding the customer journey and

addressing the question, “How easy is it for customers to do business with us?”

EXPANDING SERVICE TO THINK ABOUT THE EXPERIENCE

As mentioned earlier, CEM is more than just service or customer feedback. That said, the success of CEM programs is quite often tied to service-specific metrics (Figure 2) as service plays a very significant role in defining the final experience delivered to the customer.

No formalized Ini/a/ve

35% In place for less

than 2 years 14% In place for 2-‐4

years 14% In place for 4+

years 37%

CEM Ini/a/ve in Place. Percentage of Respondents

Figure 1: Maturity of CEM Ini4a4ves

“For us, CEM is the management of the entire customer experience and the customer's perception of that experience through effective

communication, demonstrating sensitivity to the challenges of our customers, and through utilization of appropriate resources to exceed customer expectations.”

~ Large telecommunications organization

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Poor customer service is highlighted as being the top reason for customer dissatisfaction and one of the top two factors leading to customer churn or loss. The one-two punch of poor customer service and ineffective pricing can deal a significant blow to the survival prospects of any organization. When considering a growth strategy, the impact of customer service is magnified given the importance of customer satisfaction to loyalty and net new revenue growth.

However, a market leading service and support experience might still not be enough if product quality is low, sales tactics are deemed questionable, transactions are difficult to conclude, information is impossible to find, and marketing tactics are overbearing. As a result, the delivery of customer experience requires the focus of the entire organization to ensure a seamless and consistent experience across all customer touch and value points.

20%

39% 51%

53% 67%

0% 20% 40% 60% 80% Change in customer sen/ment

Change in sales and new customer growth Change in loyalty or advocacy Change in customer reten/on Change in customer sa/sfac/on

Metrics Used to Measure CEM Success, Percentage of Respondents

FIgure 2: Measuring CEM Success

Table I: The Importance of Satisfied Customers

Reason Ranked Importance 1-‐Lowest, 7-‐Highest

They continue to spend on products and services 5.4 They increase their spend on products and services 5.3 They bring in new prospects/customers 4.7 They promote the organization’s brand 4.3

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GETTING STARTED

Customers, consumers and businesses alike, are looking for greater access to information regarding the products and services that they consume or are looking to consume. They can attain this information and knowledge via channels that are supported by the vendor organization, or via other information sources which are primarily web-based. This access to information also molds the expectations regarding customer experience as customers and prospects are well aware of the top-rated experiences delivered elsewhere. More so, customers expect the experiences delivered to them in their consumer lives to be matched by enterprise business partners, a dangerous proposition for those B2B organizations that scoff at the notion of customer experience management.

Changing customer expectations are the top driver (Figure 3) for CEM evaluations within organizations and given the competitive landscape, inability to meet customer expectations can lead to increasing customer churn. As new customer acquisition becomes all the more difficult in an extremely competitive environment, failure to meet and exceed customer expectations can often lead to dwindling customer base and falling revenues.

For those organizations looking to get started with a new initiative or looking for ideas to energize an existing initiative, the factors listed in Table 2 are required for these programs to be successful. These results indicate how vital it is for CEM to be a company-wide initiative that has support at the top but is also bought into by those employees at the front lines who directly communicate with customers. In addition, CEM initiatives cannot be tied to one business function, but require collaboration across all business groups.

33% 43%

53%

77%

0% 20% 40% 60% 80% 100% Increasing customer churn/loss

High cost of new customer acquisi/on Compe//ve factors Increasing customer expecta/ons regarding

access to informa/on and service

Drivers of CEM Ini/a/ve, Percentage of Respondents

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Thirty-three percent 33% of organizations report that their executive teams own CEM initiatives with another 26% state that service and support takes primary ownership of the CEM program. Only 11% report that ownership is in the hands of a dedicated and cross-functional CEM team. Outside of ownership, accountability for CEM results is high as 78% of executives have CEM-related goals and 35% of executive teams are provided incentives on CEM-associated goals and objectives.

PROGRAM STRUCTURE

Outside of the internal requirements of success, there happens to be the matter of customer involvement and integration. Without understanding the customer journey or the customer’s perspective, it is impossible for the organization to make the changes necessary to augment the customer experience. While this might seem obvious, only 19% of organizations engage in customer journey mapping exercises as part of their CEM programs. More so, only 23% indicate that the development of channel engagement strategy is included in their overall CEM programs.

58% 61%

70% 74%

79%

0% 20% 40% 60% 80% 100% Customer insight and performance

repor/ng

Customer experience design Customer analy/cs Cross-‐func/onal collabora/on Customer feedback management

Components of CEM Programs, Percentage of Respondents with CEM Program in Place

FIgure 3: Components of CEM Programs

Table 2: Success Factors

Reason

Average Importance 1-‐Not Important at All, 5-‐Extremely Important

Executive Support 4.7

Customer-‐Centric Culture 4.6 Employee Engagement and Buy-‐In 4.4 Cross-‐Functional Collaboration 4.4 Focused CEM Initiative Goals 4.3

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On the other end of the spectrum, customer feedback management is a core component of most CEM programs as organizations are looking to tap into solicited and unsolicited feedback to get a true gauge of shortfalls or gaps in the existing customer experience. While feedback is essential in addressing customer issues, it should be paired with exercises around customer journey mapping and experience design to enable the servicing organization to proactively modify the experience delivered. This is preferred as opposed to reacting to negative feedback.

What is extremely positive about Figure 3 is the fact that nearly 75% of organizations with a CEM program include cross-functional collaboration as a core component. While the level of collaboration may vary (as evidenced later) across organizations, bringing all parties to the table when determining or modifying the customer experience is essential to the success of any CEM initiative.

RECOMMENDATIONS

To present best practices around the development and modification of CEM strategy, TSC isolated the Top 30 performing organizations in our recent research surveys. These organizations were those that returned:

- 80% or greater levels of customer satisfaction - 80% or greater levels of customer retention

- Revenue growth over the previous 12 months (average revenue growth amounted to 14%)

Other characteristics of these organizations, not used to isolate them as the Top 30, revolve around:

- Organizations experienced a 10% growth in total customer base over the previous 12 months

- Organizations drove a 7% increase in customer sentiment over the previous 12 months

- These teams represented a variety of service and engagement models including web-based, field-based and those with physical support locations

- 87% of respondents in this group either lead or were active participants in their CEM initiatives

- Only 27% of these respondents held service and support titles - 47% of these organizations served a global customer base

- However, 33% of organizations returned less than $100m in annual revenues Some of the common characteristics and processes followed by top performing organizations form the basis of our best practice recommendations.

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Place CEM under the ownership of a dedicated team.

Two-thirds of the leading group has CEM under the oversight of an executive or a dedicated CEM team. This is necessary to ensure that CEM activities address all customer touch points and that the impact of collected feedback and insights is shared across the organization.

Make executives accountable for CEM goals.

All of the organizations in the leading group hold their business executives accountable for the attainment of CEM-related goals. Forty-percent (40%) also have incentives built in for their executives around CEM goals.

Dedicate resources to CEM programs. Don’t hide them under sales, marketing or service initiatives.

In addition to having executive ownership and accountability for CEM results in place, leading organizations also dedicate resources towards their CEM initiatives. This comes in the place of a dedicated team, dedicated budget, and dedicated strategy. Ninety-three percent (93%) of the leading group has a dedicated team and strategy in place, while 73% have a dedicated CEM budget to support the strategy.

Acquire a single view of the customer.

Top performing organizations are in line with the success factors reported in Table 1. One critical area of focus for these organizations not shared by all others is on the integration of data across multiple silos in order to develop a single view of the customer. These organizations pay a great deal of interest on the accuracy of their customer database and the subsequent availability of customer interaction and feedback data across the enterprise.

Understand the customer journey and customer effort.

While leading organizations are more likely than others to map customer journeys as part of their CEM initiatives, only 30% of the group undertake journey-mapping or customer effort score exercises. We see this changing as more and more organizations interviewed by TSC, such as Johnson Controls and Safelite AutoGlass, are undertaking journey-mapping exercises to develop an accurate understanding of the end customer experience. More so, organizations are looking to develop a scoring model tied to customer effort to evaluate the type of experience delivered via existing channels. This is done not only to improve the overall experience, but also to ensure consistency of experience across multiple channels.

“CEM refers to the processes required to ensure that a client is successful in their use or our products, can articulate the value that our products deliver to them, and remains with us as a client on an ongoing basis”

~ Small (25-50m in annual revenue) Software Supplier

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Customer analytics are key and can be used to develop a segmentation strategy.

Customer feedback needs be paired with better analytics to enhance the customer journey. Nearly 90% of leading organizations include a customer analytics program in their CEM initiatives to get insight on customer preferences for channel usage, product attributes, service requirements, marketing responsiveness and more. More so, better analytics around customer behavior can also support a customer segmentation strategy, in place for 53% of leading organizations. While customer segmentation is not a new concept when it comes to product sales and marketing, it is beginning to gain notoriety from a service delivery perspective.

Listen, learn, collaborate and engage.

Collecting and cleansing customer data is one part of CEM. The other extremely critical part is the activity that is driven with the aid of customer data. For leading organizations, the following are business areas that are primarily impacted with the aid of customer data (as indicated by greater than 60% of respondents):

- Services development strategy - Cross-function collaboration

- Overall service and support strategy - Customer handling processes - Marketing programs

- Customer loyalty programs - Sales strategy

- Service process development

Areas of focus in the near future for these organizations with regards to the use of customer data:

- Dedication of technology to specific engagement channels - Billing process overhaul

- Product development strategy - Channel presence and balance

SUMMARY

For those organizations that do not currently have a CEM initiative, 53% indicate that they plan to in the next 24 months, further indication of the importance of formalized CEM initiatives to customer and business results. Challenges to the successful development and execution of these initiatives range from cultural issues (41% of respondents) to a lack of focus and leadership in support of CEM (32% of respondents). Only, fifteen percent (15%) of respondents don’t see a benefit from an investment in CEM. If CEM is just viewed as a buzzword and not as an integral part of the business to truly learn from and enable customers, then it will never be a successful journey. As leading organizations take a greater stake in the success of their customers, delivering the right customer experience via a customer partnership is essential to ensuring continued success.

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uncommon service-centric businesses can emulate the strategies deployed by Global Service Leaders.

The Service Council™ presents its annual Smarter Services™ Executive Symposium in

April − May. The Symposium provides an invaluable opportunity to meet and network

with Services, Customer Experience and Customer Management Executives in an environment conducive to advancing Executive relationships.

For more information on The Service Council™ visit www.theservicecouncil.com. For