Customer Experience Improvement Through a “Learning Relationship”


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One of the golden rules of marketing has always been “know your customer.” Historically, this required deep knowledge about a market segment. You know the drill. It included understanding the unmet needs and wants of a particular target market including: demographics; attitudes; consumption patterns; media habits; lifestyle; and other dimensions that enabled you to define a homogenous group. And then you tailored the 4-P’s of marketing (product, price, place and promotion) based on your knowledge about this market segment.

This approach to “target marketing” worked pretty well for decades. It enabled marketers to develop products, value propositions, advertising creative, and media buys that were well targeted to a particular market. But, in today’s world of Customer Experience Management (CEM), how does this approach stack up?

CEM: Beyond the 4-P’s and CRM

Most marketers acknowledge that today’s big challenge is managing the customer’s experience across products and channels…and over each customer’s lifecycle. This requires more than managing the 4-P’s of marketing. And it’s beyond CRM which often focuses on a single product or channel transaction—the short-term. Alternatively, CEM requires designing an experience for each customer based upon knowledge of that customer, delivering it across products and channels, and measuring individual outcomes that enable improvement of future interactions. Simply stated, CEM is about creating learning relationships—over the long-term.

But where are we on our journey towards managing CEM and creating learning relationships? What capabilities do companies have today to manage the customer’s experience across products and channels? Is anybody really doing it? How are they doing it? And, if I improve my company’s capabilities, will it really matter?

Do companies really understand the changing needs of each individual customer if they are not updating customer profiles?

The Customer Experience Maturity Monitor (CEMM), a qualitative and quantitative research study conducted by Peppers & Rogers Group, SAS Institute and Jubelirer Research, addresses these questions in its first report, “The State of Customer Experience Capabilities and Competencies.” The research measured 58 variables in four categories: customer orientation; customer insight; customer interaction; and improvement. The premise is that a company must have more than the desire to manage the customer experience; they must have enterprise capabilities that leverage customer insight to better-manage customer interactions and continuously improve results. Importantly, for these capabilities to work, the company must have a customer orientation –a culture that focuses on the customer and builds trust.

A Critical Gap

One of the big CEMM findings around customer improvement (a la learning from customers) was the following gap:

  • Over all, 60 percent of respondents agreed with the following statement: “My company treats customers differently, based on an understanding of the needs of each one individually.” At first glance, 60 percent seems to indicate that companies are creating learning relationships with individual customers.
  • However, only 28 percent rated there capabilities as good or excellent in response to this statement: “Customer profiles are continuously updated to reflect all customer activity (purchases, returns, etc.) as well as outbound (campaigns) and inbound contact (channel visits, call center, web, stores/branches, etc.).”

Do companies really understand the changing needs of each individual customer if they are not updating customer profiles? To find out, you have to look a little deeper.

Improvement: Measure and Report + Learn and Improve

For success, CEM requires your company to continuously learn from individual customers and to demonstrate, to customers, that you are listening to them. Here’s a quote from a CEMM research respondent: “Through research, we have discovered that if we really want our customers to want to bring us more business and advocate us to others, we need to demonstrate (through practice) that we know them, look out for them and reward them. In practice, executing on that is what builds the trust.”

Well said! But how does a company demonstrate that they know each individual customer?

Measure and Report: It begins with measuring and reporting what matters. The CEMM research revealed that customer metrics are on the marketing dashboard. For example, 43 percent of respondents rate the performance of their company as good or excellent in using customer metrics (e.g. profitability, campaign response, channel behavior) to measure organizational performance. Importantly, 31 percent rate their performance as good or excellent in aligning incentive programs to customer metrics. In addition, 30 percent rate highly their use of customer metrics to measure individual employee performance. Wow! This is much higher than I expected. Kudos to the 30 percent!

But many companies are still struggling with marketing measurement basics. Only 41 percent rate their performance as good or excellent at measuring campaign ROI—which is surprisingly low given all the great marketing automation technology that easily solves this problem. Equally surprising is only 30 percent rate their performance as good or excellent at measuring marketing mix ROI—which is where Marketing Resource Management (MRM) easily optimizes marketing dollars between the plethora of advertising and promotional options.

Learn and Improve: Learning about individual customers is difficult! CEMM research revealed that only 31 percent of companies rate their performance as good or excellent in capturing a customer’s expressed needs during live customer interactions. Imagine this…your customer is on the phone with your call center rep (or on your web site …or some other touch-point) and the customer is giving your company the information required for success and, tragically, you are failing to capture it.

But some companies are not missing the opportunity. In fact, 21 percent of CEMM respondents rate good or excellent their ability to change customer interactions based on changes in a customer’s profile. So one out of every five companies is, in fact, learning from customers and improving customer interactions based on this knowledge. This one-to-one understanding creates customer intimacy, loyalty and advocacy–the goal of CEM.

State of CEM Capabilities

What is the current state of CEM capabilities and managing improvement through a learning relationship? A verbatim from one customer summarized it best, “Customer experience management is a constant work in progress.” … “We truly believe that the investments we make today are like farming—we are planting seeds, but we don’t necessarily get to harvest right away.” Indeed, CEM is a journey!

Why is the CEM journey important to your company? According to the CEMM study, companies with mature customer experience capabilities enjoy a two- to three-fold competitive advantage (see Customer Experience Success Starts with Insight: Transforming Data into Action for details). In addition, you can download the Customer Experience Maturity Monitor (CEMM) white paper (free registration required) for a deeper discussion of all findings.


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