What more could you wish for than 288% higher lifetime value of your key accounts? That’s really the goal of customer experience management, whereas recommendations, high survey scores, repeat purchases, and so forth are all means to this end. It’s all about longer, more profitable relationships between your company and your customers.
So what’s the recipe for it? You can drive longer relationships at a cost, sometimes a high cost that requires constant investment. Or you can drive longer relationships organically, making it natural for customers to be eager for long-term relationships with your company. The organic route is most profitable because early investments you make to empower that eagerness have long-lasting, significant residual impact.
How do you make it natural for customers to be eager to stick with your company for the long-term? Understand them better than your competitors do, anticipate their reactions to your decisions and executions, and prevent hassles for them. It’s the chronic hassles that typically grate away at the relationship and cause negative word of mouth and brand switching.
As mentioned above, 288% increase in customer lifetime value 1 was achieved by immersing employees at all levels in customers’ realities, emphasizing the end-to-end customer life cycle, and reviewing action plans regularly with senior leadership for resolving customers’ top issues. The financial gains: this large software company saved $22 million annually in cost to serve customers. And that’s in addition to the revenue gains represented by ongoing higher lifetime value of many segments of customers besides their key accounts.
The silver bullet of customer experience financial rewards is preventing recurrence of pervasive issues brought to your attention by customer feedback.
By reducing time to resolve issues by 89% for more than 130,000 customers, this company was establishing “customer experience annuities”: redirecting precious resources (budget, time, morale, goodwill) from what otherwise was a never-ending hamster wheel of costs to higher-value investments.
Identifying and resolving patterns and root causes of value diminishers for the entire customer base’s well-being is the number one sign of a customer-centered company. When your customer experience improvements remove ease-of-doing-business hurdles for your whole customer base, you’re empowering all your customers to reward you.
When you prevent recurrence of customers’ hurdles, you’re empowering your current and future customers to keep rewarding you now and for the long-term. This is the heart of customer experience management: preventing recurrence of chronic issues.
Other examples of companies tapping into the customer experience treasure trove by taking on the thorniest customer issues are VMware, EMC, SunTrust, and tw telecom, and you can hear their stories on my online talk show’s recordings at http://tinyurl.com/cem-show.
If your customer experience management strategy is emphasizing how you want customers to behave rather than how you want your company to behave, you’re missing the treasure trove of financial gains promised by customer experience management.
Why it matters: chronic issues drain your company’s and customers’ precious funds, resources and morale, with numerous negative ripple effects. While chronic issues are present, it costs you much more to generate positive word-of-mouth and its promised revenue.
Here are 4 prerequisites for preventing recurrence of customers’ chronic issues:
1st Prerequisite: Understand Customers’ Realities
(1) Is your voice-of-the-customer (VoC) approach designed to make your whole company smarter than your competition about your customers’ realities? If not, re-design it! You should have two camps of VoC: (1) exploring customers’ expectations, workarounds, consequences, and ultimate objectives among all the players who influence buying decisions and (2) monitoring what’s working and what’s not, with emphasis on moments of truth (pivot points for customer churn in their end-to-end journey).
(2) Is your VoC approach designed to inform every functional area and business ritual (budgeting, planning, reviews, development, advancement, rewards, etc.) how to be in-sync with customers? If not, revise it! You should be able to derive from (1) above a treasure trove of insights that are useful to engineering, IT, legal, quality, finance, safety, marketing, facilities, etc. Avoid the temptation to ask customers specifically about all your functional areas and business rituals. Make sure your VoC approach is a delight for customers to participate in by making it about them and how they want to give you insights (not about you and how you want to hear it).
(2a) In fact, one of the richest VoC sources to inform company-wide synchronization is your contact center: here customers tell you “I was trying to . . . because . . . and I expected . . . but . . . happened, and now . . . is my consequence.” Wow! Mine that. Stream those insights on a regular cadence to the relevant organizations in your company. Make sure every organization gets a stream.
(2b) Another rich source of real-time VoC is informal interactions between customer-facing as well as non-customer-facing staff and your customers. Some companies are making it easy for employees to immediately summarize what customers said so the VoC team can stream those insights on a regular cadence to the relevant organizations.
(2c) Why wait for a survey down the line when customers are telling you right now about very useful sentiment, expectations, consequences, and ultimate objectives? Some companies capture these insights via on-the-spot video, photos, audio, etc. All of the approaches I’ve mentioned are VoC best practices of the future. Make it easy for customers to guide your company anytime, anywhere, any way they want.
2nd Prerequisite: Establish Cross-Organizational Teams
(1) Does every organization in your company understand “what’s in it for them” regarding customer experience success or failure? If not, remind them that their budgets, salaries and dividends come from satisfied customers. Likewise, remind them that scale-backs are tied to customers choosing an alternative over your brands. Help them self-discover the ways their jobs are more complicated because of chronic customer issues: do-overs, returns, scrap, efforts dedicated to fixing things that didn’t go right the first time for customers, external or internal.
(2) Does every group in your company understand how they impact customer experience performance? If not, show them how to revise their job description (or department charter) in terms of “why are customers funding this?”. You could conduct a demonstration at your all-hands meeting or make this a workshop exercise, an onboarding or performance review tradition, or a staff meeting exercise guided by a PowerPoint slide with notes sent to all supervisors and above. When everyone is viewing their work in the context of why customers care enough to fund it, hearts and minds will get in-sync with customers.
(3) Do you facilitate cross-organizational teaming to resolve and prevent recurrence of chronic customer issues? If not, establish it as a systematic endeavor company-wide. For more than one organization impacting a chronic customer issue, show them what they gain collectively and individually by resolving and preventing recurrence of it. Establish a cadence: within X weeks of your company’s customer relationship survey and/or within X weeks prior to your annual planning process, etc.
3rd Prerequisite: Understand Root Causes
(1) Do your employees know how to identify true root causes? If not, educate them about the “5 why’s” technique. For a symptom that customers see, ask yourselves why your company is causing them to see that. Then ask why your company is causing that thing to occur. Then repeat until you’ve asked why 5 times. When you get to the 5th set of reasons then you’ll see the culprits. Sometimes these are “sacred cows”. Don’t let that slow you down. Do some broad-brush math or quick-and-dirty research to help your executives have a conversation about those thorny root issues. Encourage them to explore options. Otherwise, your issue will keep resurfacing, much like a dandelion in your lawn.
(2) Do you facilitate root cause analysis in a cross-functional setting? If not, set up a workshop where subject matter experts with deep experience in your company can sit together and discuss the 5 why’s real-time. You’ll find that the process is faster and more accurate than assigning root cause analysis to someone separately or trying to do things without real-time dynamics. There may be a few things that need to be verified from the cross-functional workshop exercise, but most things will be amazingly accurate.
(3) Do you create action items that address the ultimate root issues? If not, make it a habit to address the fifth root. Some actions will be long projects, while other actions will be quick wins. Avoid the temptation to skip up to the 2nd or 3rd or 4th root causes. You can make some progress with those, but ultimately, the issues are likely to resurface. Make sure actions are not lipstick on a pig. When the action items are identified in a cross-functional workshop setting with subject matter experts at a high enough level, you’ll be able to identify what’s reasonable. When you involve top executives in reviewing the group’s recommendations before the workshop ends, they’ll be able to help the group make realistic action assignments, and open doors for the group’s options.
4th Prerequisite: Establish Adoption & Accountability
(1) Do you facilitate adoption and accountability for tackling chronic customer issues? If not, make this the focus of leadership at the C-level and among the customer experience management team. Most companies rely on red-yellow-green status reports, but this obscures what’s really going on in the action plan. For something this crucial to your company’s performance, take the time to review a single-page strategy that reminds everyone what the customers’ pain is, what the root causes are, and who’s doing what and when to prevent recurrence. This allows celebration of progress and removal of roadblocks.
(2) Do you make it uncomfortable to miss commitments? If not, change the way you circle back to promises from previous meetings and the way you emphasize how success of the group is compromised by lack of follow-through.
(3) Do you make it easy for groups to learn from one another? If not, facilitate a knowledge bank of lessons learned and make it easy for employees to access it. Encourage them to access it often. For groups working on similar things, ask the leading performers to help the lagging performers bring their work up to par. Conduct lunch-and-learns and other methods of cross-pollinating across your company.
The treasure trove of customer experience management is found by preventing recurrence of customers’ chronic issues in their relationship with your company. By minimizing or eradicating these issues you’ll find gifts that keep on giving. You’ll re-allocate precious resources from massive ongoing fixes to higher-value investments. Longer, more profitable relationships between your company and your customers are the aim of customer experience management. And you’ll achieve rewards like 288% increase in customer lifetime value when your company DNA requires solid dedication to preventing chronic issues.
1 Forrester VoC Award 2011, Adobe.
This article is ninth in a year-long series with these topics:
Introduction: Customer-Centered Business: 10 Keys to Organic Growth
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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