In developing plans and executing processes for optimizing customer experiences, and the parallel goal of increasing customer loyalty behavior, we often see the admonition “hope is not a strategy” at play within organizations. A recent Oracle study illustrates how wide the gulf is between corporate intention and corporate reality.
A key finding of this research, conducted among more than 1,300 global senior executives, was that over 90% of executives said that improving customer experience is a top priority over the next two years, in part because of the recognized risk to the customer base and to sales if they don’t; and a similar percent said that their companies want to be customer experience leaders. However, just over one third were only now beginning with formal customer experience initiatives, and only one-fifth considered their customer experience program advanced.
Another major disconnect was that, while four-fifths of the companies surveyed identified social media leverage as central to building stronger customer experiences, over one-third have no social or mobile approaches to support either sales or service. Reasons identified for not moving forward on these initiatives include inflexible technology, siloed organizational structures and systems, low investment, and inability to measure initiative results. This slow adoption, or non-adoption, seems to be not so much a reflection of stagnant international economy as it is of significant, historic corporate conservatism and risk aversion.
Customer experience and behavior studies have, for years, concluded that the vast majority (90% or more) of customers would switch suppliers because of poor customer service, and might even pay a premium for proactive service. In the Oracle study, fewer than half of all executives surveyed thought that customers would defect due to negative experiences, nor did they think that customers would pay for great experiences. That finding is yet another huge divide between ‘conventional wisdom’ of executives and the realities of customer behavior.
In the Oracle study, it was found that company executives often believe that increasing spend on advanced technologies will help create more positive experiences for their customers; and many reported planning to do so. These investments, however, haven’t delivered the value that customers want, such as more personalized communication, omni channel self-help, service and support through mobile and other channel devices. and integrating social media with service processes. This is further evidence of averting the real, but decidedly more effective, risks associated with improved customer experiences, namely:
a) Moving to a more customer-centric, responsive, and participatory culture,
b) The removal of internal structural and functional barriers,
c) Customer goals that are stated, restated, and restated again, consistently by senior executives across the enterprise, and
d) Visible, real-world performance metrics, and reward and recognition for specific customer experience achievement
There are lots of customer experience success models which can help to overcome risk aversion, and make worthy corporate intentions a reality. One particularly effective model is that articulated by Vernon Hill, the Chairman of Metro Bank in London, and the retail-oriented entrepreneurial executive who made Commerce Bank a regional marketing force in U.S. banking for several decades.
In his recent book, “Fans! Not Customers” (Profile Books, London, 2012), Hill stated: “We want our customers to be passionate about doing business with Metro Bank, to become Metro fans. Our philsophy is more than just a corporate mission statement: it’s a way of life. Our corporate spirit – something we’ve made a unique part of our social fabric – enables us to succeed. We are fanatically focused on delivering a unique customer experience. Over-investment in facilities, training and people, a focused geographic management, and countless mystery shops a year ensure that we always exceed our customer’s expectations”.
As Hill observed, “You don’t have to be 100 percent better than the competition in order to beat them. You have to be 15 percent better, and you have to get better all the time. It’s all about standing out from the competition…..”
Excellent points, Michael. The chasm between what execs say and do has been monitored as well over the past 3 years in the ClearAction Annual B2B CEM Best Practices Study, with the same conclusions you note here.
It’s interesting that customer satisfaction was indeed a big part of TQM for a large percentage of companies in the early ’90s — and in reality, much of what companies are doing now for customer experience management is not that different from what they were doing for customer satisfaction back then. With the exception of believing CX has a lot more to do with marketing, sales, social media, and automation than we ever thought about in TQM 20 years ago.
For your readers’ clarity on the opening phrase of your article, Customer Experience Optimization, as I’ve defined it on my website for a few years now (see sidebar at http://ClearAction.biz/blog), is an elevated version of CEM:
Customer Experience Optimization is enterprise-wide alignment with customer priorities, to prevent hassles for customers, reduce waste, increase organic customer enthusiasm, and grow both revenue and profit sustainably.
CEM is enterprise-wide dedication to serving customer needs from their perspective. CEM recognizes that businesses exist to serve customer needs, which results in revenue for paychecks and budgets and shareholder value. (Note: if what you’re doing isn’t enterprise-wide or addressing the full customer experience, then it isn’t truly CEM — it’s a “component” of CEM! And business results you can expect from a component are by definition reduced accordingly.)
CX includes all of a customer’s experiences with a solution from realization of a need until the need no longer exists. Hence, it is broader than touch-points, deeper than user experience, and its duration and components are determined entirely by the customer.
Seeing so much pain in companies, per their responses in numerous benchmarking studies, about the dampening effect of silos on CEM progress, I wrote an ebook called “Customer Experience Improvement Momentum“, featuring tools that are necessary to accomplish (a)-(d) listed in your article.
To optimize customer experience, it’s essential to gain a deep understanding (insatiable curiosity) of customers and to respect that understanding deeply enough to align your business accordingly, discarding/re-engineering processes and policies across the entire company that are at odds with these findings: hence, optimizing both top-line and bottom-line growth. Here’s an article that describes how companies can do that: Employee Engagement for Superior Customer Experiences.
I can’t wait to read your latest book and the one you reference in your article!
Lynn –
Thanks so much for your thoughtful response, and the identification of resources. We’ve seen stakeholder behavior measurement evolve from the early TQM-centric approaches associated with customer satisfaction, through techniques like the actionability-challenged NPS, and now to stakeholder advocacy and brand-bonding. This represents an ongoing desire to link functional and operational enterprise enhancements, such as customer experience optimization, to metrics which are accountable and relevant. Simply stated, the measures need to be both real-world and monetizing for companies to reliably depend on them for performance evaluation and growth. See some of my previous blogs and articles on this subject, including:
http://www.customerthink.com/article/customer_advocacy_behavior_personal_brand_connection
http://www.customerthink.com/article/linking_employee_behavior_to_customer_loyalty_advocacy
Michael