Putting the customer at the heart of the business is the central tenet of value marketing. Marketing is about generating products and services which are rooted in the needs of the customer rather than the need of the company to sell its products. In order to be ‘in tune’ with the needs of customers, rather than second guessing, a company must ensure that the voice of the customer is integral to the company strategy, and that the customer is considered and discussed at boardroom level and not just by the customer-facing staff and departments; a move toward customer centricity. This practice is known as customer experience management.
The evidence for making this cultural shift is strong:
- Two-thirds of customers say a positive customer experience caused them to spend more;
- Eight out of ten customers would pay up to 25% more for a superior customer service;
- Three-quarters of those who switch suppliers/brands relate this to a poor customer experience and service;
- More than half of those who recommend a company make this based on the customer experience rather than other factors such as price or product;
- Almost all of those who have had a bad customer experience tell others about it; mainly to warn them off or stop them buying from the supplier.
More and more companies recognize the importance of management of the customer experience. However, only 12% of companies surveyed in 2009 had a disciplined approach to improving customer experience. Although listening to the customers is a step in the right direction, it is the first step on a long journey which cannot be achieved overnight and which, most importantly, requires a change in culture and attitude rather than purely in process. Savvy companies are delving further into the customer experience, placing it at the heart of all they do. With this there has been a flourish of tools, techniques, processes and people who are there to offer their services.
Why Focus On The Customer Experience Specifically?
Differentiation has long been felt to be the key to growth, though it more commonly refers to differentiation of products and services, the brand values and position, and the channel. As products and positions have become more commoditized, companies have struggled to find their point of difference. However, more recently, the term “Experience-Based Differentiation” has emerged. Forrester describes this as:
“A systematic approach to interacting with customers that consistently builds loyalty.”
Essentially, it is being seen as significantly different in the marketplace through the way in which the customer and the customer’s experience is managed, and the representation and demonstration of the brand values at every point of association between customer and the brand/company.
Forrester’s 2012 Customer Experience Index Report, which surveys more than 7,600 consumers about their customer experiences, highlights three observations:
- Customers’ expectations are getting higher and higher
- Companies wishing to differentiate on the customer experience will have to work harder as the gap between the best and the worst widens
- Suppliers can no longer afford to be complacent about the customer experience.
The Forrester Index relates to B2C markets and customers. However, the practice extends to business customers too, as B2B suppliers recognize the value-creating capacity which can be demonstrated in the ROI. There are key differences between B2B and B2C customers: decision-making units are larger and more complex in B2B markets; there are often fewer suppliers available; and products often have some ‘technical’ requirement. However, the assumption that B2B business decisions are made in a cold, logical manner in the absence of all emotions has been challenged.
Most companies would feel that their customers are considered in their activities. However, the degree to which the customer is considered can vary dramatically. The starting point is an honest evaluation of where on the spectrum of ‘customer centricity’ the company lies (see Figure 1).
Managing the customer experience is easier said than done. It has been found that while most companies want to engage in this approach, many have little idea of how to go about coordinating all elements of the customer’s experience across the company. It is noticeable that the number of dedicated senior executive positions directly responsible for improving customer experience has grown significantly in the past few years. Indeed, the position of Customer Experience Director or Chief Customer Officer (CCO) is no longer unusual on the board.
Serving Or Engaging Customers?
This brings us to consider what we mean by customer centricity. Consider your own experiences when choosing a broadband supplier. How far do you feel your broadband supplier has gone toward making you feel engaged with the supplier rather than simply served by the supplier? What impact does that have on how you feel about that supplier, your likelihood to recommend your supplier, your likelihood to switch to another supplier when faced with a better deal, or your willingness to buy any additional services, such as hardware, cable TV, etc., from that supplier if they were offered? The same applies to the business buyers e.g. the buyer of bulk chemicals, stationery or food products; where the strategic importance of the account can be very high indeed to the supplier.
The company that seeks to differentiate on its customer strategy needs to engage its customers. This involves far more than serving them efficiently and effectively. It involves tapping into the emotions of the customer, making them feel connected to the supplier and the brand at every interaction with the company, wherever this takes place, with each and every company representative and on whatever subject/issue; the company knows the DNA of the customer and the customer experiences the DNA of the company.
In his book The DNA of Customer Experience: How Emotions Drive Value, Colin Shaw, following years of research looking at emotions elicited from customers, found there are four clusters of emotions which drive or destroy value (see Figure 2).
The top cluster, Advocacy, is rooted in the feeling of happiness. Shaw sees happiness as the ultimate goal humans seek: we seek out experiences which make us feel happy, and happy customers become advocates. The Recommendation cluster includes basic emotions like trust, being cared for, feeling valued. The personalization element of these emotions is very powerful as a desire to recommend.
The lower two tiers hold some danger signs. The Attention cluster contains emotions organizations use to attract attention i.e. interested, indulged, stimulated, energetic. However, companies need to ensure they have something to follow this. Attraction alone soon fades.
Finally, the Destroying cluster is the most dangerous of all. These emotions are negative and tend to come from organizations which are focused on the ‘inside’ rather than the ‘outside’ view. Customers feel frustrated, angered, irritated, neglected and dissatisfied in their interactions with the company.
This model illustrates that a core element of the customer experience strategy needs to incorporate the emotional side of improving customer experience as well as the processes. The power of the people delivering the product/service to elicit these emotions is critical in making the difference between serving and engaging customers.
What Is Customer Experience Management?
Accepting that the experience of the customer with the organization affords greater opportunity to elicit emotional bonding with customers raises some important questions for the organization in strategically managing the customer experience:
- How do we build organizational commitment to our customers?
- How do we deliver great customer experiences?
- How do we inspire staff to want to deliver great experiences?
- How do we support our customers’ needs and goals?
- How do we join up the customer experience across touchpoints?
- How do we measure the impact of loyalty?
Customer Experience Management (CEM) starts at the top. It requires commitment from the senior leadership to listening to the customer and embedding their needs and experiences into strategy. It is common in large organizations for the various departments and functions which touch the customer to operate in a ‘silo’ fashion. CEM requires cross-functional involvement and brand alignment, which cannot be achieved without senior leadership buy-in (and resources). CEM also requires a particular skill set from the staff; people who have a commitment to delivering great experiences for their customers, to going the extra mile to ensure the customer feels happy, and to do this on a consistent basis every day. Therefore, leadership, brand clarity, people, and cross-functional involvement are core requirements.
Bernd Schmitt, renowned consultant and value marketing thinker, defined Customer Experience Management in 2003 as:
“the process of strategically managing a customer’s entire experience with a product or company.”
He built on this further to say that:
“The term ‘Customer Experience Management’ represents the discipline, methodology and/or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.”
Schmitt essentially advocates a paradigmal shift from the traditional marketing concept, customer satisfaction measurement and CRM approach toward an approach which takes account of the ‘experience’ of being a customer, from end to end, cradle to grave (however long that might be). Schmitt proposes a model of Customer Experience Management that involves conducting touchpoint analysis: This involves identifying the touchpoints that the customer comes into contact with across the organization, brand, service, or product, followed by the development and implementation of the desired journey the customer makes through the organization.
Schmitt’s model has been criticized as being very linear and appropriate only for one-off transactions, thus may be more suited to B2C customers. With business customers, the journey is less straightforward, with repeat scheduled purchases, contracts, mutual dependence, and complex relationships. An approach which maps the journey and punctuates it with ‘moments of truth’, ‘key points of influence’, and ‘pain points’ is felt to be more realistic and offer more opportunities to manage the customer experience along a convoluted journey.
A typical approach for a Customer Experience Strategy involves the following stages (see Figure 3), starting with the assessment and segmentation of customer needs.
Step 1: Needs Assessment and Segmentation
The starting point is to understand what customer needs are, what drives them, what challenges them, and what they need from suppliers’ products and services. Coupled with this is the segmentation of customers into groupings which enable us to see and serve the customer more specifically. This can be based on ‘firmographics’ (i.e. known facts about the customer such as geography, company size, or sector), behaviors (i.e. what they buy, when they buy, where they trade, etc.), or on needs (i.e. what they want, where they are going, what their drivers are). The latter is the most discriminating and requires a deeper understanding of customers to achieve.
Step 2: Customer Journey Mapping
This involves constructing a detailed customer journey map for each of the customer segments. It is important to look at individual segments in this exercise as their journeys may differ. The customer journey map details the customer touchpoints with the supplier from the first awareness through to usage and, if appropriate, termination of usage.
Step 3: Identify the Desired Experience
The customer journey map is then used to design the ideal customer experience. This stage is about reflecting on the customer journey map and comparing the actual experience with the internally-perceived experience. Customer journey mapping enables the organization to review its processes and streamline these to make the experience more effective, efficient, and enjoyable for customers; one which they will want to repeat and to tell others about.
Step 4: Design the Brand Experience
This stage is about emotion; it addresses the feelings that we want to evoke in customers in their experiences with the brand. To design the brand experience, it is important to have a clear vision of the brand identity and values. These are often translated into ‘promises’ which will underpin the customer experience in terms of what they can expect from the relationship with the brand. They are usually generated around positive emotions which draw the customer into a closer relationship with the brand. This stage also involves looking at the people who deliver the experience, their attitudes, and how much they reflect what the brand represents when working with customers.
Step 5: Structure the Customer Touchpoints
Here the various touchpoints for the customer are structured to ensure the processes are in place to deliver the experience for the customer—one which generates the desired emotions associated with the brand to deliver longer-term loyalty. This touchpoint analysis stage is often quite process driven, looking at ownership across the business for the various touchpoints, and ensuring that the experience is seamless and the brand value delivered across and between all the touchpoints.
Step 6: Measure and Develop
This is the closing of the loop; measuring performance. There are several approaches to measuring the customer experience, not least the measurement of the return on the investment in financial terms. Common customer survey measures utilized are:
- The periodic customer satisfaction survey — the ‘deep dive’ considered overview of the customer experience
- The event-based satisfaction survey—centred around a specific interaction, delivered very shortly after the interaction
- The tracking survey—a regular, random survey of customers, tracking perceptions and performance on key measures
This data is used both strategically and operationally to make improvements for individual customers (usually key B2B accounts), groups of customers (segments which have particular needs), or all customers (general themes which would improve the experience across the business).
Developing a comprehensive program requires investment in both time and resources to implement across the business, and it needs to have senior management buy-in but operate company wide. It is like a religion with some core values: PACE
- Processes—are these in place to ensure a smooth journey?
- Attitudes—are the people across the whole organization delivering the experience aligned and representative of the brand and its values?
- Communication—do we communicate the importance of the customer at all times?
- Evaluation—do we have anything in place to ensure we are delivering it?
Customer Experience Management (CEM) and Voice of the Customer (VOC) are both programs which raise the profile of the customer in the long-term security of the business, recognizing customers as an asset for the business and thus worthy of boardroom consideration. The approach incorporates and brings together customer research in the form of needs assessment, customer segmentation, customer journey mapping, brand identity and perceptions, and satisfaction and loyalty measurements.