Customer Experience Management: 10 Best Practices to Create Real Business Value

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I was speaking at a Customer Experience conference recently and was asked by one of the delegates “So what comes after CEM?” We have grown up on a diet of TLAs (Three Letter Acronyms) first being exhorted to embrace TQM, then BPR, through CRM, CMR and now CEM (Customer Experience Management), so it seems perfectly reasonable to ask about the NBT (Next Big Thing!).

But to do so runs the risk that CEM will follow a path of being a fad rather than a sustainable route to achieving competitive advantage and customer growth. My answer was that I don’t believe there will be a “next big thing,” rather we will find more rigorous ways of implementing CEM across new channels and employing innovative new ways to satisfy customers. I can’t conceive of a time when customers or what they experience will ever become obsolete.

CEM has become well established in the US and UK markets and is becoming increasingly a “hot” topic in the newer emerging markets. Unfortunately with so many consultancies jumping on the CE bandwagon it is not always implemented with the level of rigor needed to achieve significant business results.

We hypothesised in Smith+co that the newer European markets would follow a similar trajectory as their US and UK counterparts along a path of awareness, enthusiasm, adoption and finally, for some, disillusionment. But could we share the lessons of successful implementations to increase the probability of success of CEM in these markets?

To answer these questions we decided to conduct research in the Polish market in early 2008 with our local partners, Executive Conversation Polska to find out the level of awareness, enthusiasm and the current status of implementation of CEM. We used a number of dimensions identified in our book Managing the Customer Experience. In this article we shall share our findings, but more importantly, some of the lessons we have learned in working with organisations world-wide to implement CEM successfully.

We hope to encourage executives in some of the newer markets to implement best practice and for their US and UK colleagues to focus on what we already know about CEM rather than look for the next silver bullet.



1. Successful deployment requires the active and continuing involvement of leadership

Execution is the hardest part of creating a customer experience because in order to deploy successfully we have to mobilise employees at all levels and align competing agendas, functions and executives. This is no easy task. Perhaps that is why that so many of the exemplars of Customer Experience tend to be organisations led by passionate founders or CEOs that see it as a primary source of differentiation. Think of Starbucks, Amazon, Southwest Airlines or Virgin and inevitably you quickly think of Howard Schultz, Jeff Bezos, Herb Kelleher and Richard Branson. CEM can work just as successfully and achieve startling results in large mature corporates too; but the need for leadership is even greater.

Many of the exemplars of Customer Experience tend to be organisations led by passionate founders or CEOs that see it as a primary source of differentiation.

Leadership is vital for any significant organisational change yet, as we concluded in our book Uncommon Practice: People who deliver a great brand experience—most leaders “stumble the mumble” rather than “walk the talk.” They fail to clearly communicate its importance to the organisation and then fail to take decisive action to demonstrate that it is high on the management agenda.

Our survey in the Polish market revealed some interesting perspectives in this regard. For example, 63 percent of the senior management respondents in our survey agreed with the statement ”Leaders make decisions that are consistent with our customer experience strategy” yet only 41 percent of their non-management colleagues agreed with them: This matters. No matter how committed to customer experience you feel it is what you do that counts. We found the highest correlation in the survey between those respondents agreeing with the statement just mentioned and “Our company’s top executives demonstrate their commitment to our customer experience strategy.”

Our experience has shown, time and time again, that the most significant factor in creating strong companies are leaders who take personal responsibility for communicating, demonstrating and rewarding brand or company values. Amazon.com CEO Jeff Bezos says “Our mission is to be the earth’s most customer-centric company.” Jeff Bezos and his executive team personally demonstrate their commitment to this mission through their actions and decisions and in the process have created an enviable reputation for reliability and one of the most widely recognised brands in the world today. Amazon reports one of the highest Net Promoter Scores (highly satisfied customers) we have seen.

2. Ensuring cross-functional ownership is vital

If the CEO or President recognises that it will take more than rhetoric to make a difference, the next common mistake is asking the Marketing VP, HR Director or Customer Service Executive to “fix the problem.” The brand and the customer experience must be owned collectively by the senior management team. Each function has its particular part to play, but to be successful these three functions must operate as what we refer to as a “Triad” to optimise resources, efforts and budgets to create an organisation-wide strategy for delivering the brand.

Our research found a strong positive correlation between the statement “We have created a partnership between marketing, HR and Operations to define and deliver the customer experience” and another survey item “Our leaders have been trained as champions of our customer experience and are leading its implementation.” When we work with clients on CEM projects, one of our first actions is to form a Steering Group comprising executives from marketing, operations or customer services and HR. One of the first meetings with this group is to educate them on what it means to lead this kind of change effort. The fact is that the experience you deliver is a result of these functions working together around a common agenda. Unfortunately, in many companies the effort is fragmented and often beset with politics.

3. Focusing on your most strategically important customers

The starting point for our work is collecting customer data to inform the definition of a promise and design the new experience. The most frequent client response to this suggestion is “We already have lots of customer data and research so you don’t need to bother.” In reality whilst organisations undertake customer research and collect mountains of data, relatively few know who their most profitable (not largest) customers are. The fact is that a few customers will typically represent the significant proportion of your profit and these are the ones to focus improvement efforts on.

Harrah’s, the US-based entertainment and gaming company, found that 82 percent of its profits came from just 26 percent of its customers and yet it only enjoyed 36 percent of their spend. However, when these customers were very satisfied their average spend with Harrah’s increased by 24 percent. By focusing on this target segment Harrah’s was able to fine-tune its offer to create greater value for these profitable customers. In the year following revenues increased by 17 percent.

This would seem to be an area where companies in Poland too feel on strong ground because over 75 percent of executives agreed with the statement “We have identified our most profitable customers” however, only 52 percent feel that they are clear about how these customers rate their experience on the things that are most important to them.

4. Finding out what these customers truly value

Knowing who are your most profitable customers is all very well, but if you do not know what these customers value and the three or four most important attributes which drive their intention to repurchase you cannot influence their behaviour. Without the answers to these questions you may have data, but you do not have insight. A key component of a branded customer experience is being differentiated in a way that is valuable to target customers.

A key component of a branded customer experience is being differentiated in a way that is valuable to target customers.

At Harrah’s, the gaming experience was redesigned to increase customer satisfaction and differentiate the brand. So for example, its Total Gold loyalty program was transformed into “Total Rewards,” which segmented customers into Gold, Platinum and Diamond categories, depending on their loyalty to Harrah’s. Harrah’s executives discovered that delays at reception were a turn-off for customers, so Gold customers benefit from fast-track lines; Platinum customers have shorter lines still; and Diamond customers have no lines at all. Harrah’s share of these customers spend rose significantly.

5. Being clear about what you stand for

In 2001, UK-based bank Barclays aired a television advertisement called “Big Idea.” It was a beautifully crafted ad featuring Anthony Hopkins as a big shot businessman with a big house, a big car and a big meeting to attend. The tagline was, “A big world needs a big bank.” The ad received a bronze award at that year’s British Television Advertising Awards, but customers replied with a less than enthusiastic, “big deal!” The ad simply reinforced common customer pre-conceptions about large banks: that they don’t care about the average person and are interested only in making as much money as they can.

Contrast this with First Direct, the online U.K. bank. Executives at First Direct spoke to their most loyal customers and asked them what they liked most about the bank. Their research identified that being able to engage with a real person was an important driver of satisfaction. As a result, First Direct’s advertising agency created ads that featured customers speaking of their experience calling First Direct and getting through to a real person, any time of day or night. The engaging message and apparent empathy struck a chord with target customers.



First Direct promises to be the bank that is “designed to fit around you, not us.” It’s no accident that First Direct claims to win a new customer every 8 seconds and is the UK’s highest rated bank. Or, that 36 percent of its new customers join as a result of a personal referral. First Direct’s customers have become the bank’s biggest advocates, reducing its costs of sale and increasing its share of these customers’ spend.

In the Polish market, 55 percent of executives feel that they have “defined a brand promise that differentiates us in the eyes of our target customers” but only 35 percent “have mapped our customer touchline to determine the key points of contact our customers have with us and how our promise should be delivered at each.” This omission is quite common in our experience and takes us on to our next point. Making a promise to your customers is one thing, delivering it quite another.

6. Delivering the promise at every touch point

In response to the statement “We have identified how to improve our services and processes to deliver our customer promise in a way that is consistently valuable to target customers,” 41 percent of executives agreed achieving a mean score of 5.8 on the ten point scale—indicating that this is a significant opportunity for many organisations. Without a rigorous process for mapping the customer touchline and designing the experience to deliver the promise the danger is that an expectation will be raised that you cannot deliver.

Stelios Haji-Ioannou, Chairman of easyGroup and founder of easyJet, makes this clear by saying: “You can spend £15m on advertising, go bankrupt and your name can still mean nothing to people. Your brand is created out of customer contact and the experience your customers have of you”

This is particularly true in today’s economy. With the pressure on sales and costs you have to make sure that every effort is made delivering those things that customers value rather than things that they don’t. This means having an intimate understanding of the customer experience and being intentional about designing it to deliver value at the key touch-points

7. Providing branded training to ensure that employees understand the brand story

Many organisations provide customer service training yet few are differentiated in the service they provide. The reason is that “vanilla” training creates “vanilla” service. This is not to say that all generic service training is bad. In fact there are some very good off-the-shelf programmes that really help to improve customer-facing skills and make service more consistent.

But if your goal is to differentiate from competitors, “branded training” is required to bring to life the values of your brand in a way that is consistent, intentional, differentiated and valuable. Most importantly it has to start at the top. Some years ago, Orange, the mobile phone company launched its famous campaign “The future’s bright, the future’s Orange.” The company wanted to differentiate on the basis of the customer experience rather than product functionality or price. As a result, it launched a series of road-shows that set out to bring the brand to life for employees. They were taught the profiles of their target customers, what these consumers wanted, the brand values and the kind of experience that would deliver them. Orange redefined the mobile phone market and opened it up to many new consumers who were intimidated by the new technology.

A key ingredient of successful branded training is to build executives into the process so that they have an active role in cascading the message. This is an approach we have used very successfully in a number of our engagements. This would seem to be true in the Polish market too because we found a high correlation between satisfaction with training and the statements, “We have continuing internal communications to build clarity and commitment around implementing the customer experience” and “Our leaders have been trained as champions of our customer experience and are leading its implementation.”

8. Designing CEM before installing CRM systems

At the peak of CRM hype, expenditure on CRM systems was estimated to have increased from $20 billion in 2001 to $46 billion in 2004. Yet one survey by Gartner research estimated that 55 percent of CRM systems drove customers away and diluted earnings.

This is because most CRM systems are installed without any thought about how they will be used to add value for the customer. These powerful systems allow companies to collect knowledge about the customer that can be used to offer them products and services tuned to their particular needs and preferences. However, for many customers the acronym CRM stands for “Constantly Receiving Mail-shots” since many organisations (and banks are the worst) use them as a blunt instrument to stalk, rather than woo, the customer through junk mail. Some software providers are now designing their products to support the customer experience and build CEM functionality into their call-centre products so that the agent is provided with all the information, tools and measures necessary to deliver the desired experience.

Gartner Research Group VP Ed Thompson speaking at a 2008 CRM Summit in London said “In terms of the user experience, perhaps only 4 percent of customers can demonstrate a genuine return on investment (ROI) from CRM initiatives, mainly because most companies fail to benchmark projects and real success stories tend to be anecdotal.” This takes us to our next tip for deployment.

9. Measuring the customer experience

Peter Drucker’s maxim that “what gets measured gets managed” is still true today. Yet most organisations focus exclusively on end-results measures. Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicators—the result of differentiation, customer loyalty and brand preference. The answer is to move up-stream and measure and manage those activities that deliver the required customer experience and drive customer advocacy.

Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicators.

Yet over 51 percent of the executives we surveyed reported that their organisation did not have a scorecard to measure the customer experience. The mean score for the statement “We have a scorecard of indicators that provide leaders with objective and timely feedback on how well we are delivering against our promise” was the lowest achieved in the survey scoring at just 4.6 on our ten-point scale.

CEO Andy Taylor and his team at US-based Enterprise Rent-A-Car only focus on one thing; the number of customers who give the highest rating for satisfaction and are willing to recommend the company to others. Frederick F. Reichheld, director emeritus of Bain & Company and author of Loyalty Rules! calls these enthusiasts “Promoters” and by deducting the percentage of customers who say that they are unlikely to recommend he calculates a “net-promoter score.” Enterprise enjoys both the highest rate of growth and, at near 35 percent, the highest net-promoter percentage in the car-rental industry according to Reichheld.

World-class organizations like Amazon.com have net-promoter scores of 75-80 percent. Reichheld has been challenged on his “one-number” approach and some academics have doubted the Net-Promoter index as being suitable for all businesses. Our own view is that measuring customer advocacy is one of the most important, but not the only metric in a company’s customer experience scorecard. However, what is important is to reward the KPIs that you want to move. And that takes us to our last point.



10. Aligning KPIs with the customer experience

One of the lowest scoring items in our survey was “Leaders measure and monitor the quality of the customer experience.” As many respondents disagreed with this statement as agreed with it. This poor result was reinforced by the fact that only 47 percent of respondents agreed with the statement “Our leaders reward employees who put customers first.” The fact is that unless there is a link between the desired business results, the customer experience necessary to achieve it and appropriate measurement and rewards then it is unlikely to happen.

We have been working with one the world’s best known luxury brands over the past year and have measured the impact of our customer experience work pre- and post-pilot and against control stores in the US, Asia and Europe. We used a concept called the “Power of One” which reduces the many complex and often conflicting KPIs to one primary success measure that the front line can influence.

In this case it was “UPT” (Units Per Transaction), a measure of the ability of the front line to cross-sell as this is a key means to drive revenue in a recession. Whilst the market may be shrinking the challenge is to grow your share of it and this is done by creating a better experience for customers so that they choose to give you their business rather than a competitor. As a result of our work in creating a brand promise, designing a new experience to deliver it, creating branded training to engage equip the front line employees with the knowledge, motivation and skills to deliver the experience and finally, aligning measurement and rewards with it, sales in pilot stores have increased by 30 percent compared with the control stores in the worst market our client has ever experienced. This programme is now being rolled out world-wide and our client has said that the only thing that will not be subject to cost cutting is this project.

The fact is that when CEM is implemented systematically it produces results. Businesses will always have to deliver an experience that creates value for their customers and differentiates them from competitors. What we don’t need is another new fad that promises results without effort- the corporate equivalent of dieting. There is no simple or magic way to lose weight or implement CEM, it comes down to commitment and being willing to implement those things that will make a difference.

25 COMMENTS

  1. Shaun,

    First, thank you for sharing. Discussions and conversations help us all to learn – through collaboration, and as the article suggests, with customers.

    As Graham pointed out, many of your 10 best, could be (and should be) applied to many different enterprise initiatives. There are a few that are specific to CEM, CRM or SCRM (Social CRM). With respect to the top 10, there are two, which I would like to dig into a bit:

    Specifically, as described above Focusing on your most strategically important customers seems to be in opposition with Being clear about what you stand for.

    The first speaks to a strong, public, customer segmentation model, treating your highest profit customers differently:

    “By focusing on this target segment Harrah’s was able to fine-tune its offer to create greater value for these profitable customers.”

    I have been at those hotels, where, many us waiting in line glance over at those being walked straight through check-in. The feeling (my own customer experience) is very similar to the following

    “a reinforced common customer pre-conceptions….that they don’t care about the average person and are interested only in making as much money as they can.”

    As a customer, I am very clear on ‘what they stand for’.

    In the traditional model, I would probably talk to friends at a backyard Bar-B-Que, and share my issues with 1-5 of my closer friends, maybe family – but it would likely stop there, 10 people at most. In the Social CRM, Web 2.0 world, I would likely post a note on Facebook, Tweet or blog about my experience. I might even rate my experience using Yelp, or some other rating/sharing tool.

    My key point here is that whether it is for customer experience management, or any other reason, strong, public customer segmentation needs to be done with caution. The world is social, customers are talking, and all expect an ‘on par’ experience. While the TV Ad was thought to be the only ‘broadcast’ in the past, every customer interaction may turn into a broadcast (again, Graham’s reference to United). Whether the expectations can be met (from a business perspective), or is even valid, is an interesting conversation as well.

    Cheers,

    Mitch Lieberman
    @mjayliebs

  2. Shaun

    A very interesting article. It sets out a number of factors that describe how to create a branded customer experience. Many of the factors could equally have been applied to CRM, BPR, ERP and TQM before CEM.

    As you suggest, CEM is the latest evolutionary stage in the development of customer-centric business. But it hasn’t replaced CRM in any way, rather, it is being used as a complementary addition to it. CEM has helped balance some of the now rather obvious weaknesses in CRM, in particular, the one-sided focus on leveraging customer data for the sole advantage of the company. CEM has helped move the focus from just doing things to customers to also doing things for customers.

    But just as CEM helped balance out weaknesses in CRM, further evolution of customer-centric business such as design thinking, customer co-creation and social CRM are helping balance out the obvious weaknesses in CEM. The biggest and most glaring weakness is the almost pathological obsession with unreal, marketing-driven brands. As a growing body of research suggests, many brands are being replaced with more generic products that more closely meet customers’ functional, emotional and social needs. Customers are not fools; they know what they want when they see it. And powered by the Internet and in particular, by the mobile Internet, they can tell anyone and everyone about it. Just ask United Airlines about the power of a single angry customer faced with a broken branded customer experience.

    The future of customer-centric business does not lie in the hands of CEM. At least not the unreal, branded CEM that you describe. It lies in a combination of real customer experiences created through design thinking, in customer co-creation at each touchpoint and in social CRM to spread the good word. This combination moves the focus from doing things for customers to doing things with and through customers. It’s about time!!!

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  3. Graham, You seem to have taken a very narrow view of what I was saying. In your reply you said “The future of customer-centric business does not lie in the hands of CEM. At least not the unreal, branded CEM that you describe.” What was so unreal about the examples I gave? I am all for design led thinking and customer co-creation but I believe that brands have to have a point-of-view, be clear about their strategy and what they stand for before they involve customers in the design process.

  4. Mitch,

    Thanks for your reply. I quite agree with your point about the effect of viral marketing as you can see from my latest blog on the Smith+co web site.

    However, I see no contradiction between “Focusing on your most strategically important customers” and “Being clear about what you stand for”. Trying to be all things to all people is a road to mediocrity. We accept different grades of hotels, different classes of airline travel, and brands like Ford and Ferrari co-existing and clearly designed to appeal to different markets. The fact is that segmentation, when done well, is more likely to result in the customer getting what they want and are willing to pay for. The mistake comes when organizations fudge the issue and pretend to be all things to all people (retail banks are a good example) but end up being nothing very special to anybody. The other mistake is to segment and raise expectations but then fail to deliver differentiated value. See
    http://www.smithcoconsultancy.com/index.php/cx-blog/ for a good example of this.

    In my experience, when organizations focus on target customers and then set out to deliver value to those customers, albeit in different ways, the result is rarely one of “they don’t care about the average person and are interested only in making as much money as they can.” Southwest Airlines offers a very branded customer experience yet I doubt that your criticism could be levelled at them?

  5. I’m thinking of this in the context of the customer experience increasingly embracing the social media. When I read this mindset into your points then you have provided me great food for thought.

    I’d like to ask 3 simple questions, which I hope are not simplistic.

    1. Is therefore, brand=behaviour? or brand=experience? or what is the difference?

    2. Who owns the “relationships” between consumer and brand?

    3. Is “branding”, as in marketers sending “messages” and “positioning statements”, dead in the context of social media (while of course “brand” lives on)?

    Walter Adamson @g2m
    Certified Social Media Consultant
    http://NewLeaseG2M.com
    Melbourne, Australia

  6. Shaun,

    I could mostly agree with your case for segmentation, but is a little outdated. As we move further into The Social Enterprise (or whatever it is going to end up being called – and I do hope is something else) the concept of segmentation grows more and more stale. It is no longer about the power you have or influence over a certain brand or company (the traditional segmentation model, each company does their own based on their own criteria), but you have to look at a complex composition of advocacy, influence, and reach before being able to segment your customers. Is a “platinum” customer more influential within their communities (yes, plural) than a no-rating customer? How do you know that the no-rating customer does not have a reach of thousands and thousands whereas the Platinum is merely within his close group?

    Would you rather provide some bigger benefit for a VIP person with a following of thousands or to someone who constantly spends a certain amount of money year/year with you? Although the old school would go for the second choice, is likely that the first person with a following of 100,000 will mouth (bad or good) about the experience to their followers and the reach and potential for good or bad customer reputation is critical.

    Stop segmenting based on their spend or who they are, begin based on how they can help your organization.

  7. By ‘profitable’ customers I am not referring to the old concept of VIP customers or whatever, so much as those customers who represent most value for your organisation. This could be through what they spend- yes but also frequency of visit, who they refer, what value they contribute through co-creation (as in the case of some Lego fans) and how they contribute to your brand community. My point though, is that unless we are prepared to design our offer to provide greatest value for those customers who lie at the core of our brand and drive business growth we are missing an opportunity. Thanks again for your comment.

  8. Walter,

    Thanks for your questions. Let me try to answer them below:

    1. Is therefore, brand=behaviour? or brand=experience? or what is the difference? – Brand behaviour is how your people, processes and products interact with customers. Brand experience is what the customers perceive and how they feel as a result. So a call centre agent may be trained to behave in a particular way and to use words that demonstrate the brand value of ‘Security’ for example by showing how the customer’s data is protected during the call. The processes obviously need to back this claim up. Hopefully the customer will experience a call that is not only efficient but which creates assurance that their investment and personal details are safe with this organisation.So the two should be very connected but they are not one and the same in as much as brand behaviour should create the brand experience.

    2. Who owns the “relationships” between consumer and brand? At the point of interaction, the employee ‘owns’ the relationship. However, management owns the process of designing the experience so that these touchpoints are consistent.

    3. Is “branding”, as in marketers sending “messages” and “positioning statements”, dead in the context of social media (while of course “brand” lives on)?
    No, I don’t think so because social media is just a new form of communication but the old principles remain the same. Someone once said that a ‘brand’ is what people say about you when you are not in the room. In other words the customers define the brand and of course this has been made so much easier because of social media. In my view the the role of marketing is to be clear about how the brand should be perceived and then put in place the internal and external processes to make this more likely through the experience that is delivered. This is even more important when messages cannot be controlled any longer as we did with above the line marketing. The implication is that marketing has a broader and more holistic role to play in organisations.

  9. Shaun,
    Thanks for your response, very helpful.

    Regarding the “who owns the relationships” question, I’d like to ask it again of you with a different twist – that is, “who owns the brand”.

    Would you view be the same as the VP marketing for Kellogg in the US when he said the brand has moved from “our brand” to “everyones brand”?

    I made a blog post about it here:
    http://www.walteradamson.com/2009/08/my-brand-2-everyones-brand.html

    What context do you put around that idea of everyone owning “brand”?

    Walter Adamson @g2m
    Certified Social Media Consultant
    http://NewLeaseG2M.com
    Melbourne, Australia

  10. Walter,

    The ownership question is not an easy one in my view. On the one hand with social media and communities of users the customers ‘own’ the brand since what they say has huge implications for brand reputation. On the other hand if everyone owns the brand then the danger is that it will lack intentional design or management and simply come to reflect the average user experience which is the wrong way round. Therefore marketing must own responsibility for defining what the brand promises and the design of the experience to deliver this consistently. Of course the employees then own the touch points where the customer actually experiences the brand.

  11. Hello Shaun,

    I agree with Mitch Lieberman and Graham Hill that most of the 10 practices apply to the pre-CEM period to. I nevertheless think it is important to keep sharing important best practices, regardless of them being unique to CRM, CEM etc etc..

    I agree with you that Customer Experience Management will not become obsolete. New (social) channels will emerge, people will invent new ways to use these channels, yet Moments of Truth and Touch Points will remain. These new channels, from my point of view just add to the mix of Touch Points to take into account (the relative importance in the mix is an interesting area for research I think). Continuing focus on the Key-differentiating Touch Points to meet the Customer’s desired outcome of your most valuable Customer’s (and I agree fully with Esteban Kolsky’s comment on segmentation) is there to stay too.

    Measurement and metrics are too often disregarded as the most important part of any Customer Centric approach. It is great that you mention 2 out of 10 best practices on these topics. I do believe though, there is much more to measuring the Customer Experience and setting KPI’s than what you describe.

    From my point of view measuring the Customer Experience is about measuring the extend to which a Company is meeting the Customer’s desired outcome. Great Companies like Amazon and Zappos do not get great word-of-mouth or Customer’s referrals by measuring NPS. They get them because they understand what their Customer’s needs and wants are and how well they are at meeting those needs. The best practice should not be about measuring Customer’s intentions (like NPS) but about measuring how well the Customer Experiences contribute to the desired outcomes (or allows Customers to co-create their desired outcomes as Graham Hill states). Internal KPI’s should be aligned with these desired outcomes. (please read my post on Zappos and NPS , including the rich comments for a more detailed opinion).

    Last, but not least, if there should be “the power of one” sustainable and customer loyalty focused internal KPI it would surely not be “units per transaction”. This KPI does only tell you something about the moment of sale and nothing about the long term return of the Customer Experience aimed at increasing Customer retention and Customer spend. UPT as the “one” KPI could seriously harm the Customer Experience when managers are rewarded based upon the result. As you rightfully quote Drucker:”what gets measured gets managed” (no matter what, I may add). A more difficult to set-up leading KPI, but from my perspective surely more in line with CEM-goals would be Customer Lifetime Value.

    We could probably spend lots of time discussing over the definition of “value”, but I think that’s a whole different topic.

    Thanx for sharing your best practices.

  12. Hi Shaun

    Thanks for responding to my comment.

    There are two types of experiences in my own experience. On the one-hand there are ‘branded experiences’. These are generally created by brand-driven companies. They revolve around the positioning of the brand, not around how customers perceive brand reality. As recent research suggests, many, if not most brands are not perceived by customers in the same way as the brands are positioned by the companies’ marketers. Generally this means brands overpromise and under-deliver, and then wonder why customers get angry, and tell everyone and anyone willing to listen. That means pretty much the whole internet-connected world today.

    On the other hand.there are ‘experiential brands’. These are generally created by customer-driven companies. They resolve around how customers perceive brand reality, not around the positioning of the brand. Indeed, the brand is often positioned as being honest, truthful and authentic. As being real. Not something that you can say about most brands and brand communications. These brands’ earned media through social networks is often as powerful as, if not more powerful than their paid media.

    The future does not belong to branded experiences, particularly where they are so different from the reality experienced by customers. You only have to think about most telcos, most banks, most utilities, most airlines, (the list is long isn’t it), to know exactly what I mean. Expensively branded experiences that are little more than a well-intentioned, but still deceitful lies! But customers aren’t fooled any more and they are not going to sit quiet about it either.

    AG Lafley was right when he said that marketers need to Let Go!… of brands, that is. It’s time for real, authentic,customer-centric experiential brands.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  13. All of the players in this conversation are being open in their perspectives — from where they stand (that alone is not insignificant).

    As the consummate ‘synthesizer’ I would suggest that any disconnects and dissonance in this conversation are a direct reflection of the ‘real’ problem — that there are too many disparate activities being funded under separate budgets and domains — wasting valuable resources through overlapping and conflicting agendas.

    The madness must end.

    We must take responsibility and insist that all of the various groups work out a collective strategy, as if they were all on the same team, agreeing on the same cause, and collectively working on different parts of the same plan — regardless of the existing organizational design that infers us to do otherwise.

    We must have the courage to stand up to budgets and organizational limits because the ability to ‘change’ it directly is not feasible. Our collective ability to agree to work around it all is stronger than the ‘reality’ we believe we are bound by. Indeed, we are bound most readily by our beliefs (reflected in our language).

    We cannot wait for ‘formal’ means to make this happen. We just have to agree to ‘do’ it.

  14. Lots of great discussion here!

    I agree that some of the CEM best practices outlined by Shaun are also true of CRM. Frankly, we’ve found a lot of repetition of core best practices over the years in researching CRM, CEM and now social media.

    Strategy, metrics, people, processes and technology play key roles in CEM, but the key differences is that CEM takes an customer-centric point of view on the entire end-to-end experience. CEM is fundamentally outside-in oriented, whereas CRM tends to be about how processes can be automated to get more value from customers. (Whether so-call “social CRM” changes this remains to be seen.)

    There’s overlap, to be sure, because some customer experiences depend on processes that use CRM technology (e.g. call centers). But other experiences are people-centric (e.g. in-store retail shopping), a blind spot for CRMers. And people are hugely important in delivering a great customer experience.

    Yes, companies should stop trying to “build a brand” just through advertising. Yes, actual experiences influence the real brand that lives in customers’ minds.

    But I think we can push the idea of “letting go” too far. Any business still needs to have a vision for what it stands for, and to communicate that vision (not overpromise it) to set expectations. I don’t think abdicating brand building to customers makes any more sense then assuming the company completely controls the brand through marketing.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  15. I agree with much of what you say but I think you misunderstand what I am suggesting in terms of measurement.

    The notion of the ‘Power of One’ is that this will be different for every situation. Essentially you are asking “How would we like customers to behave in order to improve our business results?”. In the case of the retailer we were working with, it was getting a greater share of cutsomer spend. For other businesses it might be trial, conversion, frequency of visit, referral, contribution to the brand community etc. The point is to agree a unifying measure that everyone understand and can buy into. Of course it it only one measure on the management scorecard but what we don’t need to do is to make things complex for our people by having a multitude of KPI’s that they feel they have no control over.

  16. Bob,

    Thanks for your very very insightful comments. I think you have the nailed the difference between CRM and CEM. For me CRM is organizational centric “How do we minimise our costs and maximise the value of the customer to the enterprise?” whereas at its best, CEM is customer-centric “How do we create a great experience and maximise the value of the brand to the customer?”.

    As you say, many of the ten tips I recommend can be applied to any major change effort, however, they are particularly important in CEM because of this distinction. Unless we can get the whole organization to buy into creating value for the customer we will probably fail.

    In reading the trail of comments above it strikes me that as consultants we help create many of these competing agendas because of our partisan championing of one school of thought over another. I began my article by suggesting that we should move away from competing TLA’s and just embrace customer experience as a concept that is sufficiently broad to allow best practice to flourish whatever its origins.

  17. Shaun, it wasn’t that long ago that CEM was the Next Big Thing. And now it’s social media. Or co-creation.

    Is it my imagination or are the hype cycles coming faster now?

    CEM is a very broad and powerful concept, but in my opinion it won’t replace CRM (the Last Big Thing) nor serve as substitute for the next Next Big Thing.

    We all (business leaders, consultants and vendors alike) seem to need a new concept (usually with a TLA) to energize new thoughts on old subjects.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  18. A very interesting thread of discussions which seems to be heading in the direction that social media is the next big thing after CEM. Frankly I don’t agree. Social media sites are growing up largely because we consumers are experiencing bad experiences when we interact with companies: agents unable to resolve our issues, web-self-service that fails to deliver, IVR which drives us mad, the list goes on.
    Then there is the confusion between CRM and CEM. I find this largely occurs because they have the same end objectives: happy customers that remain loyal, cost less to provide customer service, and maybe buy more. To me there is a clear difference, and I base this on having implemented just about every major CRM product and having research CEM early this year. CRM is about managing internal processes. It tells marketers who to include in their campaigns, it manages the process of creating and executing campaigns, and it monitors the outcomes. It tells sales people who to contact and when, and what historically information the company has to support those calls, and it analyses the results. It manages customer service cases from initiation to conclusion, and it analyses performance. Each creates experiences but doesn’t manage them.
    The whole point of CEM is that is pro-actively manages the customer experience as it happens. Based on historical information about the caller and information collected during the call, it advises the agent what to say next. It lets the agent personalize the experience based on the customer’s profile and the context in which they are calling. It does the same during web-based self-service. Based on the same customer information it supports the personalization of the experience and puts it in the context of the customer. Just like the recent Aviva adverts pro-claim, it treats individuals as a person, and it treats the interaction in the context of the customer’s individual preferences and past history.
    There are three big inhibitors for companies that try to implement CEM. Companies don’t really know their customers because my research shows that companies have so many different sources of customer data, including what customers are saying about them on social media sites, they just can’t bring it all together to create that all illusive single customer view. Very few companies have implemented the type of technologies that can support real-time management of the interaction e.g. a smart agent desktop, rules-based self-service applications, enterprise search technologies that can deliver information from both structured and unstructured forms of customer data. Thirdly, very few companies objectively measure the customer experience by using customer feed-back applications.
    We all have been the recipient of both good and bad experiences, and we will go on doing so. Companies that manage these the best are the most likely winners in the long run, so in my view companies need to adopt CEM and keep it top of their priorities.

  19. Great article and discussion. On the issue of brand ownership, I agree that you don’t own your brand. It’s the (prospective) clients’/customers’ perception of the core values, personality, and positioning of your product/service/company that defines the brand. In integrated marketing, you must control your brand, and brand consistency and focus are critical to the brand’s success. But the people own your brand.

    I recently posted an article on the brand ownership issue, touching on the effects of social media. If you’re interested:
    http://robwolfemba.wordpress.com/2010/04/19/your-clients-own-your-brand/

  20. What other leading indicators can one use to measure Customer Experience or success of a CEM program?

    Thanks.

    paulo

  21. Hi Paulo,

    The leading generic indicators are employee satisfaction and advocacy. The specific indicators are the ‘value drivers’ for that particular industry. For example, in retail it might be ‘easy to find what I want’. In motor distribution it might be ‘trustworthy salespeople’ in business class airline travel it might be ‘seat comfort’. So you really need to find out what the drivers of high levels of satisfaction are and measure those along with the usual NPS or advocacy scores. Good luck. Shaun Smith

  22. Customer Experience Management is now evolving to Customer Engagement Management, which will evolve to Customer Transparency as Web 3.0 and 4.0 mature.
    The best book on Customer Transparency is The Customer-Transparent Enterprise

  23. Real nice read. Today, customer experience management is about more than serving your online customers. It’s about more than knowing where customers shop and what brand of dog food they buy. It’s about knowing your customers so completely that you can create and deliver personalized experiences that will entice them to not only remain loyal to you, but also to evangelize to others about you – and that’s the most valuable form of advertising there is.

    Gaining this depth of knowledge about customers isn’t something that just happens. It comes from extracting insight from all customer touch points and channels across your entire organization. It’s about harnessing mountains of customer data from online channels and beyond, and extracting valuable insight from that data with speed and precision.

  24. Agnes,

    You are correct. The winners will be those that are able gain deep insight into their most valuable customers, find out what they value most, and then turn that into an experience that delivers across multiple channels seamlessly.

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