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Customer Experience Leadership

Customer experience has become an incredibly popular term over the last few years. There are dozens of Linked In sites dedicated to individuals and groups talking everyday about customer experience. Conferences on the subject and experts have emerged in every corner of business talking about the importance of customer experience as a business imperative. Customer experience has emerged as the next panacea for successful business performance. At the same time CE is becoming the next version of another effort that started many years ago.

Customer Experience Management (CEM) emerged in the last decade as both a management methodology for improving the experience customers have with a company’s products or services as well as a system to help manage customer oriented data and information. Companies have spent billions of dollars implementing CEM into their businesses not always achieving the incredible results that the methodology and systems promised to deliver. Why not?

Although many have given reasons for CEM’s failures, I believe it comes down to one word that had this been understood by all it might have increased the success rate many times over for CEM projects. That word is ‘leadership’. Yeah, yeah, I know you are saying come on leadership is single reason CEM failed? My point is that had CEM been called Customer Experience Leadership a different outcome would have been more likely due to the nature of what leadership implies.

We have all heard the arguments about leadership and management for success in any pursuit. There is an old saying,”… leaders can manage but managers can’t lead.” The same holds true for a successful business. Our research has shown that companies who have strong leadership focus and strategy around customer experience perform better financially, have the highest employee satisfaction and score the highest on customer satisfaction surveys. In addition a white paper we circulated in 2011 to senior executives (VP and above) rated Leadership as the most important element of a successful strategy for customer experience. As we have written about in past blogs a comprehensive set of elements are necessary to create the right culture of customer experience and sustainability. At the same time without leadership no strategy will ever be able to be created or sustained.

I know you are saying this is too simple to be right but in every circumstance whether it’s large or small, global or local, product or service businesses, where we have found true leaders not managers, the results of the customer experiences stand out and business results, are better than the competition. So if you want your business to be successful, and you believe that customer experience is a strategy that leads to that success then you need to evaluate the organization for leadership behavior before you start anything else. Because CEM is not the answer, CEL is.

Deteriorating Customer Experiences

Have you noticed over the last several years that the quality of customer experiences for the most part have deteriorated in almost every aspect of business? Whether its B2B or B2C it seems like companies forgot what is critical for their long term success is the importance of a great customer experience. Now when I say customer experience many just think of customer service. Customer service occurs at that moment of time when an interaction takes place with a customer. However, that is but one piece of the customer experience puzzle and even if done well may not bode well for a business’s longevity. What I am talking about is a systematic and strategic process of focusing on the customer in every aspect of a company’s business. This is not just the customer service organization. It’s the financial organization, the legal organization, accounts payable and receivable, manufacturing, product development, IT, logistics and every functional group in the enterprise. From the top of the company to the person on the dock and everyone in between it’s a committed and understood part of a business that the customer experience is what it’s about and how the business succeeds. This concept is as much in line with B2B businesses as it is for B2C. Large or small it’s all about the customer experience that ensure business success and longevity.

In a previous blog my partner, Doug Morse, wrote about how a year ago Delta Airlines committed publically to spending millions of dollars in training customer facing agents to be more “customer friendly” as they put it. They assumed that their problem was that their employees who interacted with customers just did not have the right skills and training to insure the perfect customer experience. Now I have flown enough in my business life to know that there are good customer facing people and bad in many airline companies. But is the problem at this company poorly trained or grumpy people or is it deeper than that? Some people probably just have bad behavior and should just not be part of the team. On the other hand if people are not empowered to take care of customers to insure the best experience because policy and bureaucracy says its “financial stupid” not the customer that matters. This may work for a while but it will not last in my opinion. The issues are more deep seated around the entire strategy and leadership which in many companies don’t focus on a great customer experience. Training people to be nicer in the airline case was just dressing up the pig so to speak.

Why has the customer experience declined so much in the last few years? Why don’t businesses get the benefit that great customer experience yields? Why do they focus on the wrong things? The economic downturn surely has contributed in some respects to the situation. Business leaders have had to make major reductions in business expenses to maintain profitability and viability. At the same time for many years before the economic meltdown the desire for operational efficiency and business process re-engineering has been the focus of many businesses seeking to increase their profitability. Strategies that focused on products and services and possibly not on what the customers really need may have short term benefits but over the long haul do not guarantee business success. The combination of traditional strategic approaches and major thrusts at efficiency improvement may result in businesses losing sight of the need to insure that customers continue to have the best experience they can get for the money they spend.

Why is customer experience important and what does a positive experience yield? Although people have spent less in the last few years both at the B2B and B2C level they still have spent money on capital and consumer based goods and services. Leaders in customer experience would be expected to do better economically than laggards and get more share of wallet as a result. The Waterman Group’s research show companies that focus on customer experience have yielded better performance than those that do not. And in a down market like we have experienced, those that provide a better customer experience declined less and recovered quicker than those that did not. Waterman shows that from 2007 to 2011 Customer Experience Leaders performance went up more than 22% while Laggards declined more than 46%. The S&P 500 during this period was almost flat at minus 1.3%. In 2008 Leaders declined 32% while the Laggards went down 49%. The S&P was down 37%. Therefore those that adopted a leadership approach to Customer Experience clearly outperform those that do not.

OK, so what does it take to create a customer experience strategy in a business? Let’s start with what does Customer Experience mean? Customer Experience is a strategic framework that considers several key elements of the overall business structure and operations that focus on the customer. As I said previously people sometimes confuse Customer Service with Customer Experience. In many businesses this translates into trying to improve the operations of the customer service operations. Although this might be a necessity where customer service is performing poorly it alone cannot create a positive customer experience if the product/service offering does not meet customer needs or the billing processes are convoluted and confusing to customers or the product/service is delivered late on a regular basis. All of these are part of the customer experience equation. They must be performed at as high a level as the customer service to insure the best customer experience. Without including those in the strategy of the business will result in long term customer experience dissatisfaction.

So where do you start this process? The best approach is an assessment that can identify the key element areas of a business’s customer experience performance. Services Transformation and Innovation Group has created such an assessment that analyzes the following elements in a business:
1. Leadership Focus and Strategy
2. Organizational Alignment
3. Employee Engagement and Empowerment
4. Technology and Information Systems
5. Metrics and Customer Analytics
6. Customer Involvement/Engagement
7. Operations Focus

This high level assessment provides an overall index and individual customer experience element analysis that can assist a business in determining where a business has strengths and weaknesses in their customer experience strategic framework. Furthermore, the application of an in depth engagement with business leaders and their organizations provides a prioritized set of actions that begins the journey to develop a long term customer experienced organization.

What we have learned is that in order to build a business with a strong customer experience direction requires two things, a customer experience culture and a means to sustain it. Without the culture all efforts to build a long term customer experience organization will fail. This is why in my previous example of Delta airlines just investing in customer service improvements alone will not solve the issues fundamental to Delta with regard to its customers.

There are many examples of companies that build the customer experience into their businesses and they do it in many different ways. Southwest Airlines, Zappos and Zane’s Cycles are three examples of how this is done right. At least a few companies don’t seem to be deteriorating. Hopefully a few more will understand the benefit of focusing on the customer experience and insure that no more hair pulling occurs.

In my next blog we’ll talk about building the culture and sustaining it regarding customer experience.

“How long will your business exist?”

In this business world of what have you done for me lately, thinking about anything beyond this quarter or this year is a challenging situation for business leaders. Shareholders demand increasing earnings per share, CFO’s want to know where have you cut costs and increased cash flows, COO’s and operations managers are being driven to increase productivity every year and analysts wonder what’s the next innovative product/service you are going to offer this year? It makes it tough to consider what and how businesses will grow over the next 2, 5 or even 10 years. The Japanese used to be masterful at this in their strategic plans, sometimes at least talking about 100 year plans. Today even they have been challenged about the next quarter or yearly results. Although I doubt anyone can be so insightful that they can see 100 years into the future, there is a common theme that does allow businesses to flourish over the long term. That theme is a clear strategy around customer experience.

Regardless of what happens technologically, environmentally, politically or globally a common theme over time in my opinion is the customer. Obviously without customers there is no business. It seems so obvious but sometimes I wonder if companies really understand or focus on this fundamental principle. Companies that are still around after 100 years have obviously been able to identify what their customer’s desire and adapt every aspect of the business to insure they deliver. A few businesses that have been around for close to 100 years have struggled, declined or gone out of business. Many argue that they declined due to lack of innovation and ability to adapt to changing market dynamics. I contend that if they really understood what their customers needed they would have been able to adapt to change and continue to thrive going forward. Only time will tell if the ones currently struggling as well as those thriving will survive another 100 years.

In a previous blog I talked about what it takes to create a culture of customer experience. The best companies have inspirational senior executives and leaders who provide a customer experience oriented strategy, align the organization to the customer and empower and engage employees toward an outstanding customer experience. This culture is critical for companies to provide a product or service that meets the expectations of the customer. But what does it take to ensure that this culture is sustainable over the long term? What happens when inspirational leaders depart, retire or pass away? Does the culture of customer experience remain or does it diminish and the results of the business go down as well? How do businesses adapt to changing market dynamics? How do they know what the customers want? How do they continue to deliver excellence as measured by the customers who buy the products and services the business provides? Sustainability is the key but what makes it up?

There are a number of key elements that can provide a sustainable customer experience culture and allow those that apply it to not only survive but thrive. These elements consist of the following:
• Metrics and Customer Analytics
• Technology and Information Systems
• Customer Involvement/Engagement
• Operations Focus

Let’s cover each of these briefly.

I have read many articles and participated in a number of blogs/postings that identify metrics as something that are most critical to measuring the experience of customers. While I agree measures are critical, again it’s the culture that is most critical to the overall customer experience strategy of a business. Metrics reinforce or help you sustain the customer experience assuming you have a measurement process focused on the experience of the customer. Many people confuse surveys like customer satisfaction (Csat), Net Promoter Score (NPS), Customer Effort Score (CES) and others as the measurement for customer experience. Over the last 10 year I have been involved in a variety of measurement initiatives, surveys and programs. These at times, depending on who you talk to, become almost spiritual or political in their intensity. People become disciples and/or heretics depending on which side of the measurement aisle you come from. I have seen all of these work and fail. It really comes down to how you use your measures and most importantly what you do with the information you get from them. The focus of your measures and the associated customer analytics need to be:
• The processes you employ to know what is critical to your customers financial success
• Your business goals and measurements that relate directly to the equity/value of your customer
• Visibility of the metrics (internally and externally)
• And most importantly how metrics and customer analytics drive improvement and action in your business

Technology and information systems provide another key element to sustaining the customer experience within the business. In many circumstances IT focuses on financial, back office, logistical and manufacturing functions to enhance the overall productivity of the business. Rarely have I seen the IT organization focus on developing the best customer experience tools for use by internal and external resources. The justification for almost all IT projects invariably deals with reduction of headcount to perform functions, reduction of inventory or improvement in the productivity of the operations side of the business. If the organization has adopted a customer experience strategy then IT’s role is not only to just focus on technology for productivity sake but also to develop the best customer experience tools and systems that support this strategy. Key attributes to accomplish this include:
• Prioritization of investments toward customer experience based benefits. (e.g. customer equity)
• Utilizing a chief customer architect or similar approach in developing systems
• Systems structured to monitor the product/service
• Systems that provide feedback from customer experiences across all business functions
• Ability to monitor future needs of the customers
Without the involvement and engagement of customers the ability to sustain long term positive customer experiences is going to be limited. A key question I like to ask clients is “Who in your company owns the customer?” In B2B companies that I have worked with they typically say, “The sales organization owns the customer.” Sometimes when it’s a B2C business and there is a strong channel in place the end customer is seen to be owned by the service organization. Rarely have I had the experience when someone says everyone owns the customer or if they do it usually is very weak at best. Lawyers, HR and Finance rarely know anything about customer experience and their effect on customers. Again, starting from top of the organization the customer has to have top priority and the message has to be everyone owns the customer no matter what function. Without the customers the business ceases to exist. Now saying that and making it a functional reality are very different. How do you make this part of the sustainability of the business? The key attributes for sustainability in this element must be:
• Developing an advocacy by all functions and personnel for the customer
• Tools, information, hiring, training and reinforcing the customer experience
• Senior leadership’s direct engagement with and integration of the customer experience strategy into the organization
• Systematic and rigorous collection of customer data and sharing across the entire organization
• Monitoring the business trends of your customer’s marketplace
• Customer involvement in product/service innovation

The last element for sustainability is Operations Focus. Operations are usually where the product/service is delivered to the customer and the transactions are validated. When it’s a physical item like a product there are a variety or operations organizations involved. Manufacturing, order management, logistics, shipping, carriers, A/R, service and more are all involved. When it’s a service then direct or indirect service delivery occurs from internal or partner organizations. This can be the case on the product side as well since outsourcing over the last decade or more has put many non-direct partners in direct contact with your customers. Some of the key attributes for sustainability of this element consist of the following:
• Insuring that operational efficiencies do not conflict with delivering the best customer value
• Managing the non-internal operations (e.g. outsources) resources to insure the best customer value
• Measurement of the performance of the operational resources in customer experience
• Extending your operations capabilities to your customers

Sustainability of the culture only comes through the reinforcement of these four key elements. Companies that do a good job in establishing the culture but do not build a sustainable process will eventually lose the ability to deliver the best customer experience over the long term.

For more information on developing a Customer Experience Strategy go to www.servtrans.com.

“Is Your Culture Poisoning the Business Results?”

In a recent blog I talked about the deteriorating state of customer experience and why companies many times tend to focus on narrow areas of customer service in attempting to improve the customer experience. While this can yield some short term improvements, in the long run it is developing a deeper culture of customer experience that will make the difference with your customers and ultimately your business. But to do this you need to affect a shift in the culture of the organization. But what is culture? How do you define it with regard to customer experience? Can you measure it and how? What does it take to change the culture?

Recently I have been reading and participating in several social media discussions on the subject of culture and how to change it. Invariably business people are highlighting that customers are not happy with their products or services, the employees in the business are not happy in being part of the organization and ultimately the business performance is being poisoned by what people are saying is the poor culture of the organization. Business people are looking for changes in the culture but what does it take to change it and create an environment that results in a thriving business?

Let’s look at what is culture. The dictionary definition says culture is “the beliefs, values, behavior and material objects that constitute a people’s way of life.” In business this is created by the psychological, sociological, environmental and physiological state of the people in the organization. These factors are driven by what management establishes in their overt and subtle messages to employees and tends to have history attached to it. I used to work for a Japanese company and I contend that the culture was strongly influenced by the Samurai culture of old Japan. Sometimes it was good but many times it felt like you were battling within the company versus battling the competition.

Most organizations establish as part of their strategic framework a set of values they espouse for the organization which at least on paper reflect the desired culture. Some of the words used in the values statement include things like:
Customer Focus
Teamwork
Trust
Ethical behavior
Risk taking
And more.
However, what gets reinforced? Or maybe better yet do these values get reinforced at all or do they reinforce a different set of values all together? A couple of companies that I believe do reinforce their values are Southwest Airlines and Zappos. Southwest reinforces the culture of making it fun to fly with them. The focus is on the customer and being extremely efficient in how they run their business. They reinforce this with the people they hire and train. Their organization is aligned to insure the best possible experience and employees are empowered to be focused on the customer. Herb Kelleher and his successors have continued to reinforce this culture of the 30+ years they have been in business and they continue to be profitable quarter after quarter.

Another is Zappos; Tony Hsieh established a culture of customer focus right from the beginning and reinforced it with hiring, training and incentives. He even incented people who could not meet the culture requirements to leave. Zappos people clearly reflect this culture in their interactions with customers, they are empowered and the financial performance of the organization reflects the benefit of this culture.

On the flip side in recent years we have seem egregious violations in business that I am sure were not in keeping with what was stated as the values of the organization. In some cases these were illegal while others just bad behavior that basically destroyed the value of the companies and clearly did not deliver the expected customer experience.

The reality is that most companies are somewhere in between. Many recognize that the culture of the organization is not getting them where they need to be in driving a high level of customer experience for their products and services. They want change but changing history is difficult and getting the employees and more importantly the customers to buy into and see the change can be tough.

Before you can effect change the question is can you measure culture and then what do you put in place to effect the change and measure the results. I recently read an article by Mark Graham Brown titled “how to Measure a Company’s Most Elusive Element: Culture.” He highlights a number of bogus approaches to measuring culture and focuses on using an index approach. I agree that this approach is the best way to measure culture and not how many cards did you print or how many attended a values training program. These are worthless measures unless you develop and knowledge, perceptions and behavior that Mark talks about in his article.

Service Transformation and Innovation Group have developed a proprietary index that we believe reinforces this idea of an index to measure the Customer Experience. We call it the Customer Experience Maturing Index (CEMI) and it has two components. The first and most powerful component is the set of elements that make up what we call the culture or behavioral part of CEMI. These elements consist of:
• Leadership Focus and Strategy
• Organizational Alignment
• Employee Empowerment and Engagement

These three elements can be measured as a baseline index for CE and then used to measure the organization’s progress on improving CE through their prioritization efforts. As we have seen the need for senior leaders to establish a clear CE direction, constantly reinforce this direction, align the organization to the customers, and engage the organization in making the CE strategy work and empowering people to make customer oriented decisions will result in the behavior and culture to move in the CE direction. Benefits will be not only improving the index but also the bottom line.

In order to change the culture of the organization it takes clear direction, constancy of purpose and time. In today’s business environment, where leaders and the street say “I need it this quarter”, time is sometimes something business leaders are not patient to give. However, time is not forever and if the current culture of the organization is poisoning your business results then can you afford to wait?

In my next blog I will cover the elements of the index that provide for sustainability of the culture. For more information on this subject go to www.servtrans.com.

Are Customers Trying to Tell You Something?

Yes and it is not good news. Is your business a potential burning platform? Are there warning indicators, direct or indirect, that signal a pending disaster? Are competitors tapping the reservoir of opportunity and providing your customers what you are not? You may be operating with symptoms that reflect a major problem for your business.

How do you prevent them from causing your own business demise? How do you prepare for these risks and successfully prepare to retain and expand your customer base? The first step is a quick assessment of your business to determine if the platform you are standing on is beginning to burn or vulnerable. Review the following key indicators to see if your business is exhibiting any of the symptoms of a current or future problem.

Your business exists because your customers allow you to exist. Customers are a large asset for any company. Are you effectively managing the customer assets? Has the global economy damaged your customer relationships and do you see some of these warning indicators?

Business/Risk Indicators (Yes or No)
1. New competitors are winning in your space with less robust offerings
2. Price sensitivity seems to be increasing in your marketplace
3. Your previous uniqueness/brand of products/services is being replaced by cheaper alternatives
4. Your business results are not meeting your expectations and you can’t put your finger on why.

Investment returns/ROI Indicators (Yes or No)
5. Your customer satisfaction (CSAT) or NPS (Net Promoter Score) or like investments have not yielded the expected results you anticipated.
6. Your cost reduction and outsourcing programs have damaged your relationships with your customers.
7. You cut the budget for customer care or service to make up for lack of profits elsewhere

Employee Indicators (Yes / No)
8. Your employee satisfaction metrics are declining
9. Your key employees or top performers are jumping ship.
10. Your employees are focused more on internal issues like their jobs than taking care or engaging with customers.
11. Career development activities have been curtailed or eliminated

Customer Experience Indicators (Yes / No)
12. Your customer orders, same store sales, bid performance, share of customer’s wallet or other customer performance metrics are declining or growing more slowly than competitors.
13. Your customer complaints, escalations and negative social network traffic are rising.
14. Your customer satisfaction metrics are not improving or trending negative.
15. Your customers are not as engaged as they used to be with you and your business.

Understanding the threat to your business:

An Explosion is Imminent IF:
You answered yes to more than 10 of these, abandon the platform immediately and save your company. This should be an immediate call to action with expert resources. The risk to your company is beyond your control, change has to happen NOW.

You See Flames IF:
You answered yes to 7 or more, you see the flames. A crisis is in progress and immediate action is required. Do not let it get out of control. You still have time to save your customers if you act strategically NOW!

You Smell Smoke IF:You answered yes to more than four, then you are starting to smell the smoke of the burning platform Take pro-active actions NOW! Get the help that you need to understand the problems and potential solutions.

Timing is critical. The financial meltdown in recent years has created a crisis that deeply affects your customer’s view of your business. Focusing on your customer assets is crucial for any successful turnaround of your business. More importantly there is an opportunity to get ahead of your competition and gain market share and share of wallet. The solution is the implementation of a customer experience strategy that encompasses your entire enterprise and helps you create customer success and build deeper relationships. The Services Transformation and Innovation Group LLC (www.servtrans.com ) has the experience, capability, proprietary tools and methodologies to properly assess the warning indicators, develop critical improvement action plans and assist you in executing a successful program focused on the customer. Interested? Contact us for more information and a self assessment of your business.
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Are you lying to your customers?

Likely the biggest sin committed by companies is the violation of trust and therefore the relationship. Directly lying or deceiving a customer is unforgiveable and sometimes literally criminal. This should be obvious to anyone who reads this, but what about the perception that you are lying or covering up even when that was not the intention? In looking at customer experience cases this happens more often than you would think.

Let me relate a story that recently happened to me while shopping for a new car. Being tech savvy, and like over 50 % of all car buyers, I did my online research. When I found makes or models that I might want I went to the manufacture’s website. Most of these sites have an option to “build and price” your vehicle. You select the model, colors, options and accessories then submit the order for pricing, search inventory or get dealer quotes. By the time I go into a dealer for a particular car, I know what I want and I am armed with information, pricing data etc. I am a well informed consumer. By recent statistics from the automotive industry and national dealers association I am a part of the majority. Many dealerships do more business through the internet or internet leads than people who happen to visit their show rooms.

Knowing that a majority of your customers are well informed should change the way that you treat them and how your sales staff is trained, wouldn’t you think? As a customer experience junkie I observed that the opposite is true in the automotive industry. The online experience and in person experience is quite different. Why? My observations went beyond just my personal buying experience as I observed the phenomena at many car dealers and all tiers from low end / low cost to high end luxury segments. At the core was an information gap between the online marketing information from the manufacturers and the direct sales staff at the dealership. When there is conflicting information between the manufacturer’s website and the dealer sales person; which one will most people choose to believe?

Here is the scenario: You gather information from the “official” website about feature / function and options. Knowing what you want and armed with what you think are the truthful facts. (Of course, the web never has incorrect information, does it …. ) you then visit the dealer only to have the salesperson try and correct your misconception that what you saw online is ACTUALLY available. In other casess the salesperson’s information about feature and functions is fuzzy or lacking. The perception that you will have is that the live person in front of you is at best ignorant or in the worst case a liar. Neither of these cases may be true but the perception is a key driver in the customer experience.

In my observations there were several different scenarios. The worst example came from a highly respected dealership group that is known to use all of the right customer experience management techniques but the sales and service people did not know the products they were selling. Here are the different scenarios I observed across the car dealers spectrum:

1. The manufacture’s website and online materials were quite good but the people at the dealership level did not know their product. They were good at the sales processes and treatment of customers but seemed to assume the cars would sell themselves. The sales people were not well informed about the products and had no idea what the manufacture’s site said or did.

2. Inconsistent information between the online manufacturer’s data and what the dealers had been told / trained on by the manufacturers rep. Online you could configure certain options but the dealer was told that in fact those options would not be available for 6 -12 or might never be made available. They knew the product and had more realistic information than could found on the website but the data was conflicting across multiple sources.

3. Some dealers chose to ignore what was shown on the manufacturer’s website and only sell the cars, services or products that they had in hand vs. what the consumer really thinks that they want. The perception is that the dealer has internal incentives to sell you something different and is therefore no longer a trusted advisor.

4. The sales people not knowing or understanding the competitive products (via public internet sites). This includes services or dealers add on items like extended warranty or paint treatments that might be available cheaper in the aftermarket. There are hundreds of sources of data about new cars outside of sponsored sites. They need to be consistent and updated as information changes.

Simple steps can improve the customer experience in the scenarios above. First, empower and train your employees. They should be as well informed as their customers. This means taking them outside of their comfort zones and making sure that if they do not know something they know where to find out. As I have said many times, customer experience is a team sport. At the very least the front line employees (really everyone ) should know what the marketing thrust is and what is on your website, your competitor web sites and they should test the experience as if they were a customer. If there are inconsistencies between the channels of information get them corrected or at least be able to explain them. Take an outside – in view of the world. Understand what your customers are experiencing from their viewpoint and broaden your perspective. Know the competition and your value to the customers.

What does this have to do about lying to your customers? These scenarios do not just apply to the automotive business. In each of the cases stated above the greater the disparity and inconsistencies of the information provided to the consumer, the more that there was a distrust of the people and organizations involved. When confronted with conflicting information between the websites and the live interactions, consumers felt that there were other motives in place that were not in their best interest. In the case where the dealer that was not knowledgeable about their own products the consumers felt like they were being lied to because the dealers gave answers that were inconsistent with the manufacturer’s online information. There was no intention to lie and the information might not have been incorrect but the perception caused distrust in the relationship. This can happen in any business where the information provided to, or by, the frontline staff is inconsistent with other public information. In the automotive case the dealers are mere representatives of the manufacturer and the information across the channels was not consistent. Information sources go beyond your four walls and may include suppliers, sales channels or even social media.

Are the people in your company perceived as trusted advisers and partners or liars? How you treat, train and engage your employees will make all the difference in the customer experience. Bad customer perceptions are never designed that way. It happens whenever there are organizational disconnects. In the car examples, the dealership is the customer of the manufacturer. The end consumer is only a customer of the dealership. This type of channel relationship happens in many industries. If everyone is working at optimizing their own domain, the customer will see the inconsistencies from their vantage point. Again, customer experience is a team sport and organization alignment is important.

Here are the key lessons from this:

1. Assume that your customers are likely well informed and that you need to understand their potential sources of information. Ensure that your customer facing people are armed with the right tools and information sources so that they can be perceived as experts and trusted advisors.

2. Customers will believe what they believe, do not argue with them or dispute their sources of knowledge. Work with them to understand their needs then find away to solve those needs without regard to the data gaps. Where possible correct the informational disparities as they are discovered

3. Ensure that there is coordination across your organization and eco-system when putting out marketing or other customer information. Everyone should be aware of any information posted for customer consumption but most especially the channels, the channel partners and the key customer touch points.

4. Shop your own company. Mystery shopping is used routinely in consumer or B to C but the same techniques are needed in B to B transactions. You would be amazed at what you would find out when you act like a customer and experience the view from their perspectives.

There is nothing really magic here but it requires the right discipline to execute effectively. You would be surprised about the number of times that customers feel that you have broken the trust that you try so hard to maintain. This loss of trust has a big impact on your potential customer equity. Ask your customers if they have ever felt deceived or lied to by your company. You might be shocked to learn the results.

That is my opinion, what is yours?

Customer Experience or Customer Retention strategy?

In reading the title of this blog, many CMOs might question if this is a trick question as many view customer retention and customer experience as one and the same set of processes. Since counting the number of customers is easier than evaluating their experience and how it relates to market value, they tend to focus on retention. The real question is what is the real strategic drivers for CEO’s ? Is it creating loyal customers and creating profitable growth or trying to stop the ship from leaking?

This blog is really an open letter to the telecom / cable providers and their C suites and inspired by Bruce Temkin of the Temkin group who has been rating and comparing industries around overall customer experience and satisfaction for some time. ( http://www.temkinratings.com/temkin-ratings/temkin-experience-ratings/ ) The whole telecom / cable / Satellite TV provider sector tends to rate amongst the lowest in consumer satisfaction and experience, regardless of who is doing the survey. We would all like to hope that market forces and competition would improve the breed but the truth is the competition for these services is minimal for most consumers. As a personal example, I have cut my AT&T spend by over 90% because of how they treated me as a loyal customer but for certain services and in certain locations, I have no real choice. Each month that I have to write a check to these companies who provide such lousy customer experience just eats at my soul. It feels like paying the devil.

As we (my company) have studied these companies, both professionally as customer experience strategists and as individual consumers, we find common issues and problems. We see that CEOs like AT&T’s Randall Stephenson, Joe Clayton of Dish Networks and Ivan Seldenberg of Verizon seem to care about customers but in our opinion view them purely as dollars and cents figures to be controlled rather than trying to provide any value to equation that engenders real loyalty. Many of these companies seem to view their product as a commodity and believe that price is the main issue for their customers. Many consumers figure they all provide the same, often poor, service so they might as well go for the lowest price. The vendors do not appreciate the potential of perceived value from the customer viewpoint. What attracts and retains customer is value, not price. Value comes in many forms does not have to cost more but it does have to be tuned to market segments.

For too many of these companies service is a cost to be controlled and not an asset with which to leverage customer value. AT&T, as I have cited before in prior blogs, is designed not to listen to their customers. (Ironic for a phone company) If I had their level of complaints I might be tempted to shut off communications as well but if they did listen to their customers in a systematic way they might actually be able to reduce the noise in their system, reduce cost and retain and grow more customers.

All of this has lead me to share with you some clues and examples to tell when your company might be in trouble in terms of customer equity.

Here is clue #1 that your company might be in trouble. If you have more employees with titles or jobs that say “customer retention” in them than you have people or roles that have “customer experience” or “customer care” in their title, you have a strategic issue. It might seem like some a case of semantics but it is not. Viewing the goal as retention creates a set of measures and cultural mindset that is very different than one of viewing the customer as the people who create your paycheck. In a large B to C company a few dollars of investment in customer experience management would yield a far greater cost saving and return on investment than the same investment in customer retention programs or in cost for acquiring new customers to replace those whom you can’t retain. We see that Pat Essar, President of COX Communications, may have already figured this out. Cox actually has a focused customer experience group that must be effective as they rate near the top of their industry in terms of overall customer satisfaction, according to the Tempkin Group. While they may still just be the fastest horse in the glue factory for now, at least they have the right idea and have certainly seen the financial benefits. They do not need to be at the top of Temkin ratings they just need to be much better than the competition. With the right focus on customers they could become a game changer and not just a segment winner.

If you were to look at company websites under the “leadership team”, what roles would you see listed? In the vast majority you will not see a Chief Customer Officer or other customer focused title that reports as a part of the C-Suite. Look at the key executive functions with their descriptions and few will have any statement that their role in the organization is to focus on their largest asset, the customer base. I do have to give a small round applause to Michael White, CEO of Direct TV who lists all of their executives but in small letters underneath the list of officers shows Ellen Filipiak as Sr. VP of Customer Care. It shows some hope and at least they are willing to listen.

Clue # 2 that your company may be in trouble. How many times a day do your employees have to say “I am sorry” or “I apologize for that”? In a recent set of personal experiences with DISH Networks I heard “I apologize for that sir” so many times I wanted to scream. All I wanted to hear was “I can fix that for you” (and mean it)

I have run large global support organizations with very large global call centers. I know the drill. I know that they work with scripts but I also know that the BEST ones are the one where the employees are empowered to act and have the tools needed to resolve a customer issue. These same empowered agents also act as customer advocates and are given a voice internally to improve things. Empathy is a good thing but it sounds hollow when not followed up by concrete action. While I am at it, don’t ask the customer “can I help you with anything else today?” when you do not resolve the original problem.

Earlier this year it was announced that Delta airline was going to send all of their customer agents to “charm school” to help with their low customer satisfaction rates. (Airlines are another industry with low overall customer experience ratings but they do rate higher than the telecom sectors.) Shortly after the charm school news Delta was in another controversy over charging returning military personnel outrageous fees for their checked baggage. They were returning from WAR not a vacation. Clearly the Delta employees are so constricted by “policies” and in fear of their jobs for any exception to those policies that they wound up creating a PR nightmare for Delta, created a nightmare for the soldiers and likely felt terrible about the policies it in the first place. These were not empowered employees and no amount of charm school will change that. If you allow empowered employees to listen to your customers and to understand the customer needs and concerns you could actually fix real problems and you would not need to send agents to charm school to make them more empathetic. Not only would you save the wasted money of the charm school, you would likely find ways to reduce costs and increase overall customer satisfaction.

Clue number 3 that your company might be in trouble. Your organizational alignment is geared toward vertical silos of specialization and the only place where cross organizational decisions can be made is at the top of the hierarchy. One silo in an organization cannot be the only group with the incentives to drive customer loyalty or even retention. Everyone in the company needs to hear the voice of the customer and have the incentive act in way that has the right balance of customer value and shareholder value. The telecom industry could learn from almost every other industry. Using another tough industry as an example like the airlines again, we see that Southwest out does most of their competitors in most key measures and their customers are the happiest in the industry. Their employees are empowered to take care of customer issues. The pilots may have a specialized skill to fly planes in the safest possible way but they also know how produce a customer experience that is memorable. They do not have to bribe their customers with hidden refunds or special limited deals to retain their customers. They are organized strategically to make the sometimes painful process of air travel into a memorable experience. They do this because the organizational boundaries allow for the flow of information about customers to be used to make important decisions. It does not matter if you are a gate agent, in the operations department or a baggage handler at Southwest you know that it is a part of your role in the organization to make memorable customer experiences and to create loyal customers.

In contrast if you look at the organization structure of an AT&T they have, for various legitimate reasons, broken up the company into lines of business like landline services, internet and mobility. For functional and regulatory purposes this may all make sense if I only focused internally. I used to do a lot of business with AT&T across their various lines of business and I was a diehard loyalist. But whenever I dealt with one line of business they were not aware of my value as a customer across their lines of business. My total lifetime value was based just on the transactions with each line of business. To me, it is all one AT&T and if I have a bad experience with one group it affects my loyalty with the whole organization. This is true of many organizations that do not strategically architect their customer data to serve their organizational model. These same problems happened with financial services companies for many of the same historical reasons. These companies grew with both regulated and non-regulated business units and lines of businesses often regulated by different agencies. When they were allowed to cross sell into these different relationships the physical organizations and the organization of customer data did not follow. Organizational alignment is not about the physical hierarchies around people it is also about the organization of your processes and supporting technologies.

These first three clues are about the cultural readiness of an organization to retain and grow their customer base. These behavioral traits start with the right leadership focus on customers and setting the right vision and goals for the organization to create a greater focus on customer value. Cultural readiness needs employees to be fully engaged and bought into the vision not by words but by the actions of the leadership team and the proper investment required to empower the employees to help drive customer value. All of it needs an alignment of people, process and technology to provide structure to the customer value culture.

In a future blog, we will look at four more clues on how to embed the customer culture in ways that are cost effective and sustainable. You can increase the value of your customer base and save costs, even in a bad economy. A strategic customer centric framework will lead to greater customer growth, great profits and will help drive innovation to help you beat your completion.

We can only hope that our wired and wireless service providers start to understand that customer experience will lead to greater customer retention and we, as consumers, will benefit from companies willing to listen.

That is my opinion, what is yours?

Delta Sends Its 11,000 Agents to Charm School ?

Delta Airlines Ranked Last Among Major Carriers in Customer Service, So Training Targets Problem-Solving and Personal Skills.

Delta sends 11,000 agents to charm school was an article from the Wall Street Journal, Thursday Feb 3rd by SCOTT MCCARTNEY. http://online.wsj.com/article/SB10001424052748704775604576120080627254652.html?mod=ITP_personaljournal_2
I do not know whether I should laugh or cry about this. I see this way too often where a company is having so many internal problems and lacks good leadership that the frontline service people get hammered by customers. The front line staff develops an attitude or a defense mechanism to cope with the inherent problems. NOBODY likes getting yelled at for things that they can’t control.

The irony here is that most people who go into customer service jobs are afflicted by what I call the “defective customer gene”. It is in our DNA to actually want to service our customers and getting criticized everyday by complete strangers is something we actually enjoy. Not because good customer service agents are masochists but because they view these moments as opportunities to turn something bad into a memorable moment that will increase customer loyalty and satisfaction. Turning around a bad situation is rewarding at many levels.

At Arizona State University’s Center for Services Leadership; they have done a lot of research around ‘Service Recovery’. These studies, and others like them, have shown the importance of being able to effectively turn around customers in the event of a service failure. No service is going to be perfect no matter how hard you try. You strive for the best but plan for the worst. An important part of this research concluded that customers who have experienced a service failure but then are treated appropriately in the recovery for that failure will be much more loyal to your brand than even those who never experienced a problem. The recovery might be simple as an apology with appropriate empathy or it might be appropriate compensation for the problem. Even doctors can drastically reduce medical malpractice claims by admitting to the error and treating the patient and family with appropriate respect and effort to resolve the issue. Service recovery must be timely, it must be sincere and it must be appropriate and proportionate in relation to the customer impact.

It is too easy to blame the customer facing agents for bad customer service. I can guarantee that the 11000 agents at Delta are NOT the cause of their poor customer service ranking. If Delta resolved the root causes like bad scheduling, poor maintenance and bad baggage handling they would not need 11000 agents nor would they need to send them all to charm school. These agents likely got their jobs because they were already charming, their management made them otherwise. They are likely no longer engaged in Delta’s success and lack real empowerment to help make the right changes.

I have seen this at way too many companies where the front line service is surely and unhelpful. These people will look beaten and defeated. They have given up trying to change things they can no longer control. They gave up apologizing for their employer because the problems never get better and so customers view the apologies as insincere. When they lack empowerment and they are no longer engaged they become automatons. Sending them to charm school or replacing them won’t help.

Customer Service is a team sport and everyone from the CEO to lowest paid employee needs to feel a part of the team that creates good customer experience. Southwest is in the same business yet they are profitable and have a loyal customer base. You can tell from the way that the Southwest employees act that they are engaged and as committed as the CEO.

Helping frontline employees to become better ‘actors’ through training them on personal communication styles, negotiating, crisis management and human psychology and the like is a great idea. This is especially true if you want to create certain brand experiences. Ritz Carlton trains their people to act and respond in certain ways consistent with designed brand experience. It would not work if there was not an infrastructure behind them to support that brand experience. In Delta’s case they are wasting money until they have a good handle on the rest of their problems.

Delta, don’t blame the messengers in your company and spend your money where it will make a REAL difference to customers. If I can’t get to my destination, safely, with my luggage at a competitive price on time then no apology from a cheerful agent is going to want to make me fly your airline. Fix your operations then getting 11000 agents to become brand ambassadors will be much easier. Start at the other end of the company, fix that first and you will see much better returns on your investments.
That is my opinion, what is yours?

Doug Morse is Founder and Managing Principal of the Services Transformation and Innovation Group LLC. He is a leading expert on creating brand value through customer centered business strategies with over 30 years of experience in companies like IBM, Oracle, Autodesk and Tyco. www.servtrans.com

Why don’t customers matter to CEO’s?

Why don’t CEO’s focus more on their customers? Ask any CEO if customers are important and they will (or should) always answer YES, very important. If you asked them how much of their organization, their time or their strategy is focused on the customer the truthful answers will likely show a different story. It is possible that they even believe that the customer is already everyone’s business or responsibility in their company but likely you will find that there is no single point of accountability for the customer experience or loyalty. They have a CIO, a COO, perhaps a CMO (Chief Marketing Officer ) but is there a Chief Customer Officer? The executive team will generally have a good focus on internal operations but no consolidated view of their customers. While this condition may not represent 100% of the companies that we see, it is unfortunately still the majority.

Traditional companies are built around a model of operations that was largely defined by the coming of the industrial age and a set of principals set forth by Adam Smith in the 18th century! We have come along way in 200+ years. The global economy is driven by service and not manufacturing in today’s world. The “The Wealth of Nations” (also the name of Adam Smith’s book) today comes from a growing service economy. It is also no secret that when most of today’s business leaders went to school and got their MBAs, service was not a part of the curriculum and certainly there was no course to teach them about Customer Experience as a discipline or a science. Even worse, if universites did have classes about Customer Experience, what would they teach? Ask a dozen or so people what Customer Experience means and you will likely get more than a dozen answers and not all of them are wrong. The good news is that people likely have heard the term and at lease have an opinion about the meaning.

Customer Experience as a business process has been around for ahwile, particularly in the consumer and hospitality space. Businesses like Disney, Starbucks or Ritz Carlton have made this a science but in the Business to Business ( B to B) domain it remains virtually non-existent. The definition of what customer experience is remains subjective. How the term is used in hospitality is very different from a bank or technology company. In my company we think that Customer Experience is a good proxy for customer value strategies. It not about products and services or customer focused solutions; it is about participating in mutual value creation.

In our research we have found that Customer Experience is used to describe 3 broad categories of work or processes. When working with clients we can expect to find that their primary focus around Customer Experience falls into one of three categories. We have seen very few who look more broadly and describe their CE activities as encompassing all three of these categories.

The first category is one that we see a lot of around the financial services sector and most often ties into CRM related projects. In the financial services sector we often see CRM and Customer Experience terms and initiatives being used interchangeably. In this category we see people wanting to do better customer segmentation, defining the lifetime of value of a customer , trying to personalize the experiences with technology and the gathering of customer intelligence for marketing purposes. The programs tend to be more internally focused. It is more about customer data management and less about customer success.

The second key category is what we call “voice of the customer” activities. This is about customer listening, understanding customer wants and needs and what the customer views as their requirements in order for them to be more successful in their markets. It is about looking to gather new ideas for innovation and understanding the customer’s view of the brand through direct and indirect channels like, social media and secret shopping.

Voice of the Customer also covers both active and passive listening. Active listening might be done through surveys or other direct research. Passive listening is about collecting the customer input at every touch point and then doing constant analysis of the data. This includes all of the social meda channels and places where a customer might ‘talk’ about your company outside of your formal channels

The third area is about creating a designed customer experience. This is about designing the brand experience and the physical or emotional experiences that will engender loyal customers or drive customer behavior. This is the most advanced area in terms of deep research and core expertise in the industry today. Disney has the Disney Institute to teach others about how to design and enable a guest experience. IDEO is a company focused around innovation and creative design around the experience economy. While the science can be applied to the B to B arena it is most often focused on consumer and hospitality based businesses.

Most established companies will have one or more customer experience programs going on even if it just customer satisfaction surveys. In most cases these disparate programs are being run by customer advocates lower in the organization. Those customer advocates often feel like Sisyphus trying to push rocks uphill. In this case those “rocks” are customer focused programs trying to reach the C-suite with critical data. Unfortunately the C-suite is not directly rewarded or incentivized to focus on customer based metrics. It is not that CEO’s don’t care about customers; it is just that they do not invest enough time, resources or energy to optimize the brand value that can be created through strategic customer experience programs. Given today’s challenges in corporate governance the CEO may not physically be able to put as much focus on the customers as they would like but this is no excuse. This is why a Chief Customer Officer might be needed.

So why don’t customers matter to CEOs? The first reason is that they have not connected the traditional measure of financial success back to the customer programs that drive those results. Second, they were typically not trained or educated in the new service economy. Third, they have not experienced the disasters that can happen when you do not listen to your customers but the new competition does. Companies that are deaf to their customers will be constant crisis mode. Complacency kills good companies.

It is never too late to become a better company. You need to have the leadership that understands the relationship between customer value and your company success. You need the right organizational alignment to remove the silo based mentalities that inhibit customer innovation. You need to re-think and re-tool your information systems to focus on the eco-systems that support your customer’s success. Your customers need to be engaged in your planning and business processes. You need your employees and partners to be engaged in driving customer success. Your brand value will increase as your customers become more successful. Focusing on how to make your customers and partners successful will lead to the financial rewards that should make ANY CEO understand why customers matter.

That is my opinion, what is yours?

Doug Morse is Founder and Managing Principal of the Services Transformation and Innovation Group LLC. He is a leading expert on creating brand value through customer centered business strategies with over 30 years of experience in companies like IBM, Oracle, Autodesk and Tyco.

www.servtrans.com
All rights reserved 2011

COMCAST on the Wall of Shame- 2011 !

COMCAST is NOT as COMTASTIC, as their ads would like you to believe. COMCAST has recently been advertising their improved customer service and in truth, I have experienced a friendlier attitude. Unlike AT&T who chooses not to listen to their customer or improve customer experience, COMCAST understood that this was a weakness and an area of customer concern. Clearly their reputation in the social media had an impact.

So why is COMCAST on our Wall of Shame? While they have dramatically improved the customer interface at the front line level, their back office operations are not aligned for overall good customer experience. This is a lesson that all companies should learn. If you want to transform the company to drive brand loyalty through a customer experience or customer centric strategies it is not just about the front line people. Chances are they always cared about customers but Customer Experience is a TEAM sport. The back office and operations has to be involved or the front line just winds up apologizing all the time.

Like all consumers we have good and bad service experiences every day. As any Customer Experience or Service professional will do, I tend to examine both good and bad experiences to understand the origins. Our company has researched hundreds of companies and has concluded that there are key factors that make a company successful or not when it comes to creating shareholder value while creating Customer value or great customer experience. These are:

• Leadership – The CEO needs to walk the talk and create the right culture
• Organizational Alignment – You need to align organizations around what the customers care about not what bean counter care about.
• Technology – the line between front office systems and back office systems has disappeared, it all affects ,and is visible to, the customer
• Metrics for success – Customer Experience or loyalty metrics are everyone’s business, not just customer facing people. Measure your value as your customers measures your value to them.
• Customer Engagement – This is a key strategy that needs a thoughtful and complete design that incorporates ALL levels and departments of the company. This design must match your vision and strategy.
• Culture – Develop it, hire for it , build systems around it, vision without a supporting culture is doomed to fail
• Operations- External and partner operations are as important as internal operations. Operate as well outside your four walls as you do inside.
• HR – You need the right people with the right skills and the right incentives who are all clear on their role in the grand objective.

Here is my personal story. I had a chance encounter with COMCAST. I did not choose COMCAST, they bought out the cable internet provider I did choose. After years of flawless high speed service, suddenly I had outages that required COMCAST to reset my modem,remotely. However when they reset the modem the speed of the system was reduced, even though my bill had not. Tech support could only tell me that I had supposedly downgraded my service and I would have to pay an upgrade charge to get back what I had lost.( or had been taken from me )I had not authorized any such downgrade. COMCAST did this internally as they absorbed the old company. Suddenly I was on a new plan that I knew nothing about. Even though my speed was cut 75% it was still good enough. But wait, there is MORE….another suspicious outage a month later and my speed is reduced by another 65%! Why? Because the previous service level offering (that I never signed up for ) was no long available …after one month. My next bill showed 10% reduction in the base price but I was now 10X slower than I had been 2 months prior! ALL of this is done without notification or my permission. Given proper notification and or option choices, which might have include paying for an upgrade fee, I would have felt better. Instead I feel violated. In 3 years my rate has gone up 75% and my speed has been reduced by 90%, and all done in stealth mode.

The insult to injury comes when you speak to the customer service rep. They are very professional, well trained but have at their finger tips a one sided view of their customer. Essentially when I try to explain my story, I am treated as if I am lying to them. I am told that I am WRONG because their systems show X,Yor Z. Escalating the issue finally gets someone who can understand what happened and is at least sympathetic. In the end I am still paying more for less service. How this was handled in the back office, change of policy, change of ownership, change of offerings etc. leaves the poor front line to deal with higher call volumes of people complaining. There is much more that goes into the background here, but for the systemic failures within COMCAST they have to go to the Wall of Shame.

Another core error for COMCAST is that their view of me as a customer is programmatic. This comes from poor marketing experts who look at internal metrics instead of external factors. They only view me for what I have purchased from them to date and not what I am likely to purchase from them. To them I do not show a good life time value as a customer because I only buy internet service. I did not buy bundles which is what they are incented to sell. What they do not know is that most of my neighbors, and many friends or business associates became COMCAST customers because I had enjoyed good service, at least in my area. They do not know that I pay for multiple providers of telecom / entertainment services at multiple locations. At the time I engaged these providers, it was not an option to bundle all of these services into one provider. I have reduced my total spend with AT&T about 75% because they do not treat their customers with respect. I was going to consolidate a lot of my personal and business spend with COMCAST to take advantage of their fiber backbone networks and bundled offerings. This is 100% the truth as I was just waiting to upgrade some technology before making the switch.

So, welcome COMCAST to the WALL of SHAME for their bad customer experience. They have lost my trust and loyalty. They have lost my future business and recommendations. This is NOT meant to be a bashing for COMCAST, there are a lot of companies of the Wall of Shame who forget that they exist because their customers ALLOW them to exist. I use COMCAST in this blog as an example. There is much more behind of this story but the take away is that Service and Customer Experience is not just a group or a department. If you are serious about acquiring and retaining customers then it is an enterprise wide strategy and team sport. I do give credit to COMCAST for serious improvements in their front line service staff and operations, they are trying to improve, they are just not there YET!