Delivering a Preferred Customer Experience

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MARKETING LEADERSHIP COUNCIL®

Delivering a Preferred

Customer Experience

Annual Executive Retreat

Sydney

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LEGAL CAVEAT

The Marketing Leadership Council has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the Marketing Leadership Council cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Marketing Leadership Council is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs are responsible for any claims or losses that may

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LEFT WITH FEW DEVICES

Potential Commercial Levers to Pull in Response to a Down Economy

Deep recession has

eroded the power of

traditional commercial

levers, leading marketers

to focus on customer

experience.

■ New business pipelines have

frozen as customers cut back on capital expenditures, ruling out reliance on new business as a commercial driver.

■ Cost-conscious customers

view product quality and reliability as table stakes and are unwilling to pay for nuanced product differences.

■ Increased scrutiny into

budgets and expenditures has put relationship-driven demand in jeopardy. 

■ B2B marketers are looking

to customer experience to drive stronger commercial performance, especially with existing customers.

Product Improvements

“None of our customers are willing to pay for the product improvements they were asking us to fund three years ago.” SVP Marketing Medical Devices Acquiring New Customers Contribution to Profit, New Customers 2007 2008 2009 All Other Selling Strategies Relationship-Based Sales Personal Relationships

Likelihood of Being a High Performer by Sales Rep Profile

Customer Experience

“In our industry no one makes a product that doesn’t work—we have to win on

customer experience if we don’t want to be the low-price player.”

23%

7%

?

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com Voice of the Customer Audits Customer Experience Councils Touchpoint Mapping Net Promoter Score Metrics

In recent years, B2B

marketers have made

notable advancements

in customer experience

management.

DOWN THE EXPERIENCE PATH

Advances in Customer Experience Management

Sales Finance Ops Marketing

Council Resources Voice of the Customer Audit Experience Storyboards Net Promoter Program Essentials

Acquisition Service Retention Awareness Key Service Moments Relevant Research and Data One-on-One Interactions MarComm Best-in-Class Competition Segment A $ $ $ $ @ @ @ @ Customer Experience Council Ordering Billing Services RemarketingCustomer Services

Meet Est. Delv

. Da te Ti mely Or der

Confirmation Timely Status Upda

te Tag Bef or e Exp. Da te Ti

mely Fuel Car

d Deliv er y V ehicle Main te nanc e A cc ount Servicing Hold Ti me Kno wledge an d Consistent Answ er Response T ime Importance Level Customer #1 #20 6.9 3.0 3.3 1.0 2.7 3.0 1.0 5.2 1.0 9 3 3 NA 1 1 9 1 3 1 3 Customer Requirements (CTQs) #2 9 3 3 1 3 1 1 9 1 1 Process #2 9 3 3 1 1 1 #3 9 9 3 3 1 1 1 #20 9 9 3 3 1 1 1 Total 435 228 28 81 76 6 5 46 18 2 161 52

Frequency of Mention Scores

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Customer experience

efforts to date have

provided questionable

returns for many

companies.

UNREQUITED LOVE

Assessments of Customer Experience Investments

Investment Return

Bain & Company Survey of 362 B2B Companies and Their Customers

■ Financial resources

■ Staff time and effort

■ Opportunity cost ■ Political capital 2006 2007 2008 2009 2010 $ ? Where Do We Go Next?

“We know we’ve made some progress to date, but I can’t imagine that

another 10% improvement to our Web site or a few seconds off of our call

center response time will pay off—we really don’t know what to do next.”

SVP Marketing Banking Services

80% of Marketers Believe They Offer a Superior Customer Experience

8% of Customers Agree

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

Marketers looking for

the next opportunity

to improve customer

experience start from

one of two perspectives:

Touchpoints or Benefits.

TWO EXPERIENCE LENSES

Two Perspectives for Evaluating the Customer Experience

Touchpoints

How effective are we across the range of typical company-to-customer interactions?

Benefits

What benefits are we trying to deliver across the course of our customer experience?

Example Touchpoints

■ Customer service

■ Technical support

■ Online experience

■ Day-to-day product use experience

■ Sales interactions

■ Product literature

■ Marketing communications

Example Benefits

■ “Is responsive to feedback”

■ “Simplifies my supply chain”

■ “Is easy to do business with”

■ “Removes costs from my business”

■ “Keeps my technicians productive”

■ “Adapts to my unique needs”

■ “Offers a great out-of-the-box

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COMMERCIAL SUCCESS

The Council created

a model to uncover

successful approaches

to customer experience

management.

The Council asked customers to evaluate the customer experience provided by member companies at two levels:

■ Touchpoints

■ Benefits

Customers were also asked a series of questions to measure:

■ Preference for a company

relative to competitors

■ Intent to continue buying

from a company in the coming year

WHERE DO WE REALLY NEED TO FOCUS?

MLC Customer Experience Model

Touchpoints

Specific interactions between a customer and the company

Customer Preference

Do customers prefer us over our direct competitors?

Intent to Repurchase

Do customers plan to continue buying from us in the coming year?

Benefits

Perceptions we create across the customer experience

Survey Population

■ We surveyed customers of 15 B2B member companies regarding their experience

with the member.

■ Council analysis is based on more than 9,000 customer responses.

■ The survey was administered to a broad cross-section of stakeholders within customer

companies, including decision makers, end-customers, influencers, consultants, and procurement officers.

■ Sample industries included:

– Business Software – Financial Services – Scientific Equipment – Packaging – Building Materials – Chemicals

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

Benefits are much

stronger drivers of

preference and intent

to repurchase than are

Touchpoints.

■ Customer assessments of

specific touchpoints are a marginal driver of their preference and intent to repurchase.

■ Customer assessments

of benefits are powerful predictors of both preference and intent to repurchase.

FINDING 1: BENEFITS OUTPERFORM TOUCHPOINTS

Model Results: Relative Power of Touchpoints and Benefits

Touchpoints

Benefits

Benefits

Customer assessments of benefits have four times

greater impact on preference and customer intent to repurchase than do touchpoint assessments.

Touchpoints

Customer assessments of specific interactions are a poor driver of both preference and customer intent to spend.

Strong Strong Weak Preference Intent to Repurchase Weak

(e.g., customer service)

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Both Common and

Unique Benefits are

important drivers of

preference and intent

to repurchase.

DISTINGUISHING BETWEEN COMMON

AND UNIQUE BENEFITS

Model Results: Common and Unique Benefits

Common Benefits

Benefits that are relevant in almost any commercial relationship.

Benefits that are specific to an individual company’s customer experience. Unique Benefits Common Benefits Unique Benefits (e.g., “responsive to my feedback”) (e.g., “simplifies my supply chain”) Strong Strong Weak Preference Intent to Repurchase Weak

Both Common and Unique Benefits are powerful drivers of preference and customer intent to spend.

Touchpoints

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

LEARNING FROM SUCCESS

Distribution of Preference, 15 Member Companies

Focusing on

highly-preferred companies

allows us to understand

how they approach

customer experience

differently.

Levels of customer preference differed dramatically across the 15 participating companies, with the top companies achieving levels of preference five times greater than that of trailing companies. P er centage of High-Pr ef er enc e Cus tomers

Lowest Observed Preference:

11% of Customer Base

Highest Observed Preference:

62% of Customer Base

Companies with Low Preference

(Between 11% and 32% of existing customers prefer these companies to their competitors)

Companies with High Preference

(Between 35% and 62% of existing customers prefer these companies to their competitors)

High Preference Companies

Focusing on high-preference companies allows us to isolate how their approach to customer experience differs from the broader population.

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FINDING 2: HIGH-PREFERENCE COMPANIES WIN

WITH UNIQUE BENEFITS

High-preference

companies rely on

Unique Benefits to build

customer preference and

intent to repurchase.

Analysis of high-preference companies leads to three conclusions:

■ Unique Benefits emerge as

the most significant source of both preference and future spend intentions.

■ Common Benefits

drive significant levels of preference but are outperformed by the importance of Unique Benefits.

■ Touchpoints are the weakest

driver for high-preference companies in keeping with the findings of the broader population.

Low

Preference High Preference

Looking Specifically at High-Preference Companies

Common Benefits

Play an important role in getting

us into the consideration set. Unique Benefits

Allow high-preference companies to distinguish themselves from other viable competitors.

2

3

Unique Benefits are twice as powerful as Common Benefits in driving preference and intent to repurchase.

1

Common Benefits Unique Benefits (e.g., “responsive to my feedback”) (e.g., “simplifies my supply chain”) Strong Strong Weak Preference Intent to Repurchase Weak Touchpoints

(e.g., customer service)

Model Results:

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

High-preference

companies have found

opportunities to deliver

Unique Benefits across

a wide-spectrum of

markets.

UNIQUE BENEFIT EXAMPLES

Unique Benefits, MLC Member Companies

COMMERCIAL FOOD INGREDIENTS

Sample Unique Benefit: “Offers commercial ingredients

vetted by demanding consumers.”

PETRO-CHEMICALS

Sample Unique Benefit:

“Provides the technical expertise needed to back our marketing claims.”

SCIENTIFIC INSTRUMENTS

Sample Unique Benefit:

“Provides a great out-of-the-box ‘getting started’ experience.”

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Proximity Bias

leads marketers to

overestimate the

uniqueness of their

company’s experience.

Marketers often suffer from a form of proximity bias— assuming that the differences they see between their

company and their competitors are also perceptible to

customers.

CLOSE TO HOME

Proximity Bias

The tendency to over-value information that is close or familiar.

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

Marketers often fall

short of differentiation

when setting a customer

experience strategy.

When asked what benefits separate their customer experience from that of competitors, marketers frequently cited a very familiar set of benefits.

SEEING DOUBLE

Lack of Differentiation in Typical “Unique” Benefits

Medical Supply Company A “Provides genuine, personal service,

above and beyond what you expect.”

Medical Supply Company B “Delivers on promises while providing

a personal touch.”

“From the customer’s perspective, it’s six of one, half dozen

of the other—they default to buying based on price.”

SVP, Marketing

Medical Supply Industry

Most Frequently Reported “Unique” Benefits Surfaced in Council Interviews

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While marketers are

naturally compelled to

showcase benefits with

obvious value, these

benefits are nearly

impossible to “own” in

the marketplace.

INNOVATION HAS MANY NAMES

Sample “Unique” Benefits Highlighted in B2B Marketing Claims

HOOF TRIMMING TOOLS

Sample Unique Benefit: “Innovation has a name: Merlin.”

COMMERCIAL HOT WATER HEATERS

Sample Unique Benefit:

“Innovation has a name: A. O. Smith.”

STEEL CUTTING EQUIPMENT

Sample Unique Benefit:

“Innovation has a name: ByStronic.”

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

To drive commercial

success, Unique Benefits

must pass two tests:

relevance and delivery.

FEW AND FAR BETWEEN

Two Typical Unique Benefit Failure Points

Relevance

Does the benefit drive Preference?

Relevance and Delivery

Delivery

Do customers agree that the company consistently provides the benefit? Relevant Benefits

Only 57% of the Unique Benefits tested across companies showed substantial correlation to preference.

Consistently Delivered Benefits

33% of benefits are delivered consistently enough to drive high levels of agreement.

Relevance High Low

43%

14%

24%

19%

Low High

Only 14% of Unique Benefits achieve both relevance and consistent delivery.

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“THE LOOK”

Even high performers

are capable of

making remarkable

improvements.

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

Improving our delivery

of Unique Benefits

drives several positive

outcomes.

FINDING 3: EVEN WINNING COMPANIES CAN PROFIT

FROM IMPROVED DELIVERY ON UNIQUE BENEFITS

Delivery: Customer Assessment of Company Performance on Unique Benefits

Customer-Stated Preference Moderate Agreement Moderate Agreement Moderate Agreement Moderate High Agreement High Agreement High Agreement High +36% Intent to Repurchase +41% Willingness to Recommend +30%

Willingness to Try New Offers

+24% Attitudes and

purchase intentions of customers who agree with Unique Benefits.

Moderate

Agreement AgreementHigh

Low

Preference High Preference

Looking Specifically at High-Preference Companies Representative Distribution of a Unique Benefit, e.g., “Simplifies My Supply Chain”

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SUMMARY FINDINGS

Conclusions from Our Analysis

Common Failure Points of Unique Benefits

Finding 1: Benefits outperform Touchpoints.

Finding 2: High-preference companies win with Unique Benefits.

Finding 3: Even winning companies can profit from improved delivery of Unique Benefits.

Failure Point 1: Proximity—Most marketers overestimate the uniqueness of the benefits they deliver.

Failure Point 2: Relevance—Many Unique Benefits fail to drive customer preference.

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From the MARKETING LEADERSHIP COUNCIL® of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

SOLVING FOR CUSTOMER SUCCESS

Council Assessment of Competing Customer Experience Strategies

A Unique Benefit-driven

approach provides

the focus necessary to

achieve differentiation

across the customer

experience.

Touchpoint-Driven Approach

A focus on optimizing each touchpoint individually in pursuit of the exceptional customer experience.

Unique Benefit-Driven Approach

A focus on selecting and improving touchpoints in a way that delivers a specific Unique Benefit for customers.

Touchpoint 1

Touchpoint 1 Touchpoint 3 Touchpoint 5

Touchpoint 2 Touchpoint 4 Touchpoint 2 Best-in-Class Customer Experience

?

Unique Benefit Touchpoint 3 Touchpoint 4 Touchpoint 5

+

+

+

+

=

KEY DECISION

How do we need to invest to get to best-in-class at each touchpoint?

Limitations of a Touchpoint-Driven Approach

■ Unlimited number of touchpoints potentially

need improvement

■ Multiple competing options for investment at

each touchpoint

■ Limited interconnectivity across touchpoints

Fails to drive preference and intent to

KEY DECISION

How do we optimize critical touchpoints to move our customers closer to realizing our Unique Benefit?

Upside of a Unique Benefit-Driven Approach

■ Narrows the set of potential investments

■ Clarifies the direction of improvement for critical

touchpoints

■ Provides a common aligning principle for

organizing the full experience

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WRITTEN IN OUR DNA

National Instrument’s Differentiated Customer Experience

High-preference

companies reflect Unique

Benefits across the entire

experience.

■ Effective Unique Benefits

link directly to the outcomes target customers are trying to achieve.

■ Each touchpoint is viewed as

an opportunity to reinforce a Unique Benefit.

Unique Benefit

Offers user-friendly technology

Unique Benefit

Provides a great out-of-the-box “getting started” experience

USB-equipped products simplify day-to-day usage

Online trialability allows customers to experience the

user-friendly nature of NI software

“Three clicks to data” installation process

No-frills packaging is easy to remove and generates little waste

Our Identity

1

2

3

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From the MARKETING LEADERSHIP COUNCIL®

of the SALES, MARKETING, AND COMMUNICATIONS PRACTICE www.mlc.executiveboard.com

I

What Is Our

Unique Identity?

2

Where Do We Invest

to Bring Our Unique Benefi ts to Life?

3

How Do We Coordinate

the Full Experience?

Identity

Refi nement Workshop

Touchpoint Assessment

Customer Jobs

Improvement Guidelines

Targeted Experience

Example

Companies

Driver Analysis

Loyalty

Touchpoint Planning

Outcomes-Based

Dealer of

Tomorrow Scorecard

Web Site Design Principles

Benefi t-Focused

Figure

Updating...

References