When J.C. Penney hired the wiz behind Apple retail stores’ success as its CEO, there were expectations that “what worked well there will do so here”. Pesky promotional discounts (600 per year) were discontinued in favor of coupon-free, discount-absent everyday-value pricing, along with a new “fair and square” logo and ads pitched by Ellen DeGeneres. The result: 33% drop in online revenue, 25% drop in comparable store revenue, and 5 percentage points lower gross margin, with quarterly losses increasing throughout 2012, totaling $985 million loss, and new debt and a new CEO in early 2013.
Why? J.C. Penney’s ecosystem was misunderstood and disrespected.
Ecosystem = living and non-living things that make up an environment and affect each other.
Recent snafus caused by faulty customer experience ecosystem management include United Airlines dragging a paying customer out of his seat and off the plane per a random drawing of passengers to make room for a flight crew to fly on that overbooked flight. And Wells Fargo employees creating phony accounts for customers in order to meet an internal goal of 8 accounts per customer.
All of these mis-steps were well-intended. Yet all of them had tremendous high-visibility that was negative, and essentially erased much of the goodwill that these well-respected brands and their customer experience management efforts had built. This is why you should thoroughly figure out your customer experience ecosystem at the outset of your business’ strategic planning process, integrate it throughout your customer experience strategy, and ensure you’re continually walking the talk.
Business ecosystem (= customer experience ecosystem) includes customers, employees, suppliers, distributors, partners, agencies, competitors, rituals (planning, funding, reviewing, rewarding, reporting, communicating, advancement, training) and the logistics and interactions between all these stakeholders and rituals.
Like a rainforest ecosystem, you must think holistically about the inter-dependencies of all elements. Think about the food chain, what informs what, who influences whom, who needs whom, what makes things tick, what gets in the way of success. In J.C. Penney’s case, its core customers appreciated getting good deals through discount sales. Ellen DeGeneres polarized its core customers: some loved the modern, humorous tone, and others felt a clash with their conservative views. Equally important, they tried to make a 110-year “conservative JC Penney corporate culture jump too far, too fast without energizing employees at all levels to truly believe before taking such a tremendous leap of faith.” (Business Insider)
Every company’s ecosystem is unique. Different people, interactions, rituals, and tones must be well understood and respected for customer experience excellence to thrive. The earlier you understand and respect your company’s ecosystem, the faster and better your customer experience results will be.
Can you think of a business you regularly bought from until something they changed misunderstood and disrespected your reasons for being loyal to them?
When Evian water sales were soaring in nightclubs, the company decided to improve margins by selling in bulk instead of individual bottles to nightclubs. Sales dropped sharply because its core customers liked the prestige of carrying the Evian bottle; bulk distribution erased Evian’s brand essence.
What’s your company’s brand essence? First and foremost you must understand and respect your brand essence as customers see it. Second, you must understand it from your employees’ viewpoint — not just the brand, but the employee experience in total. Don’t stop there. Think of your suppliers, distributors, partners, and agencies as extensions of your company — after all, you certainly rely upon them all for your success.
Customer experience managers are typically sensitive to customers’ views and to competitive standing, but less adept at the other players’ views and inter-dependencies. Command-and-control approaches to suppliers, distributors, partners and agencies may be affecting their effectiveness, and in turn, your effectiveness, more than you think.
This article focuses on employees and rituals as ecosystem components absolutely vital to customer experience excellence taking root firmly in your company’s DNA. This article is fourth in a 12-part series: Customer-Centered Business — 10 Keys to Organic Growth.
We’ve all known customer experience programs that have come and gone. All because deep roots were not established by understanding and respecting the company’s ecosystem. Typically, this happens when the customer experience management approach was too narrowly applied in the company, such that it seemed to be a foreign element and was eventually rejected by the ecosystem. Don’t allow that to happen!
Here are 4 prerequisites to a successful customer experience ecosystem:
1st CX Ecosystem Prerequisite: Understand Your Company’s Whole Ecosystem
As Jeanne Bliss recommended in her book, Chief Customer Officer, know your company’s power core — is it product, sales, marketing, vertical business, IT, customer, or other? This tells you a lot about your company’s internal workings.
Take inventory of your company’s rituals (planning, funding, reviewing, rewarding, reporting, communicating, advancement, training) at the corporate level and around your power core, then for the various groups across your company. Why are things done the way they’re done? What are the “sacred cows”? What’s already done within a customer experience excellence context? What isn’t, and why not? How could customer experience context be infused in each ritual? Make note of the logistics and interactions between all the rituals and all the stakeholders.
2nd CX Ecosystem Prerequisite: Respect Ecosystem’s Needs in CX Hierarchy
Your hierarchy should probably be rank-ordered with customers at the top, followed by employees, suppliers, distributors, partners, investors, then competitors. This hierarchy of needs should prevail throughout all your rituals so that everyone’s thinking and actions follow suit automatically, simply as what your culture is.
Why this order? Customers are your primary source of funding, and employees and suppliers comprise your core capabilities. Distributors and partners (channel, alliance) extend your core capabilities. All of this serves the interests of your investors. Competitors are important to your ecosystem because of the expectations they engender with customers and the forces on customers’ decision-making; however, customer expectations are influenced far beyond your industry players. For ecosystem management, follow this hierarchy and you’ll keep the horse before the cart.
The examples mentioned earlier were evidence of this hierarchy going haywire. Customer experience context for everything everyone does is an absolute must!
3rd CX Ecosystem Prerequisite: Weave-in CX to Everything Everyone Does
Customer experience context for rituals, roles and decision-making of all kinds can make all the difference between ongoing success or disruptive snafus. Does your C-team treat customer experience as a determinant of corporate strategy, goals and structure? If not, you’ll be pushing a rock uphill. When you present customer insights, do you help managers see obvious relevance to their work, and impetus to continually improve? When you share customer stories and comments do you indicate what each of the various functional areas can do to make a difference? Are roles and responsibilities written from the customer’s “so what?” viewpoint?
A manager at SunTrust began asking in every meeting: “Are we doing this because customers have said so, or because we’ve been in banking for so long?” Other managers realized this was a good challenge to their thinking and doing, so everyone began to adopt the habit of double-checking internal assumptions. This kind of habit is necessary in every nook and cranny of your business. One mis-step by any function — legal, facilities, safety, marketing, IT, etc. — can cause a costly customer experience snafu.
4th CX Ecosystem Prerequisite: Maintain Strength of CX in Your DNA
Weaving customer experience excellence into all your company does is the best insurance against derailment. When you make it integral to advancement criteria and executive hire criteria, you’ll be much more likely to maintain a strong CX ecosystem for decades to come. When you make it central to your Board of Directors’ thinking and doing, customer experience ecosystem will more likely develop deep roots within your company.
Continue to make customer insights intriguing to all functional areas. Be creative to nurture insatiable curiosity about customers. You must fight complacency, keep up with evolving expectations of your customers, and insist on all corners of your company maintaining customer-centered context.
Conclusion: Understand, respect, weave-in, and maintain your customer experience ecosystem as a key success factor for your company. As daunting as it may initially appear, it is certainly feasible, and you may find that it’s much more exciting and fulfilling than you imagined. It will save you a lot of money, ensure goodwill, and accelerate the positives of all of your customer experience management efforts.
This article is the fourth in a year-long series with these topics:
1. Goals — Sharing the Vision
2. Values — Walking the Talk
3. Structure — Nurturing the Ecosystem
4. Processes — Preventing Silos
5. Policies — Empowering Growth
6. Motives — Driving Win-Win Attitudes
7. Engagement — Collaborating for Results
8. Improvement — Preventing Issue Recurrence
9. Innovation — Creating Mutual Value
10. Momentum — Embedding Within Your DNA
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