Investment in customer experience management has increased or remained stable since 2005 for 88% of business-to-business companies, according to the 2010 ClearAction Business-to-Business Customer Experience Benchmarking Study. As the first global B2B analysis of best practices in customer experience management (CEM), this study provides insights on the growing role of customer experience in corporations. Four out of five B2B firms assign overall responsibility for customer experience initiatives to a vice president or director-level executive, and one in five companies treats customer experience inputs as a determinant of corporate strategy.
The study equally represents both large (more than 10,000 employees) and medium-sized companies (between 1,000 and 10,000 employees) headquartered in North America, Europe, Asia, and the Middle East. Industries represented include equipment, financial services, insurance, legal, medical, manufacturing, publishing, telecommunications, technology, and transportation. Half of the participants have been in a CEM job role for at least five years.
Three out of four participating companies say their customer satisfaction scores meet or exceed their goals; net promoter scores meet or exceed the goals of 54% of firms. A third of B2B firms say their goals are being met for market share, referral rates, differentiation, and loyalty, and half of the respondents say it’s too early to determine CEM’s impact on these goals.
The potential power of CEM is under-utilized: although more than half of company executives say that CEM is a competitive differentiator, only 24% use CEM as an influencer of major business decisions, and 20% treat CEM as a formal business process.
For more information on acheivements of B2B firms, see the full study at http://www.clearaction.biz/benchmarking. For the purpose of highlighting opportunities for leapfrogging current industry performance, the remainder of this article emphasizes opportunities for improvement in CEM practices.
Generally, CEM is focused on revenue-oriented programs, and it is implemented company-wide by less than half of B2B companies. For example, less than one in four companies has company-wide implementation of these best practices:
- Identifying all buying influencers within customer companies
- Analyzing lost sales
- Calculating lifetime value of customers
- Basing front-line decisions on customer experience or customer lifetime value
- Segmenting customers by lifetime value or customer experience parameters
Most implementations are within a functional area. The Service organization typically drives most of the customer well-being programs, such as complaint resolution, voice of the customer, customer touch points, and customer experience improvement. Marketing is usually the organization that drives customer intelligence, references, advocacy, loyalty, and internal branding.
Lack of cross-organizational cooperation is cited as the number one obstacle to CEM success, followed by lack of CEM strategy and weak follow-through on strategy. These issues have a greater bearing on success than resource constraints such as budget and bandwidth. With a focus on revenue-oriented programs, 60% of survey participants who manage customer experience in their companies have followed a marketing or service career path. Although CEM has its roots in total quality management (TQM), participants say that ISO 9000 / quality goals have low relevance to their CEM programs. (Semantics may have a role in this finding, as in-depth discussions with selected participants acknowledged “six sigma” relevance to their CEM programs.) Under-utilized TQM tools known to increase initiative momentum include systems thinking, internal branding, incentive pay, change management, organizational learning, quality tools, and relationship skill training among non-front-line employees.
New Mindset is Needed
Ten characteristics differentiate CEM from the common knowledge of former initiatives such as customer satisfaction, loyalty or customer relationship management. The level of understanding of these characteristics among executives company-wide was assessed in the 2010 ClearAction B2B CEM Benchmarking Study. The best understood tenets of CEM (top half of graph below) reflect aspects of customer perception measurement. The lesser known tenets describe the customer’s high degree of control in characterizing customer experience, and the need for organizations to maintain insatiable curiosity and uncanny adaptability for delivering superior customer experiences.
Here are the ten ways that customer experience is unique from customer satisfaction:
1. Perspective: customer experience is defined entirely by the customer, not the solution provider.
2. Preventive: customer experience gravitates toward the easiest and nicest methods to get and use solutions that address customers’ needs.
3. Duration: customer experience encompasses the point from which customers become aware they have a need until they say that need is extinct.
4. Dynamic: customer experience evolves with the customer’s context — the purpose and circumstances of their need, and overall experience reference points.
5. Choice: customer experience is built on trust and mutual respect for variety; share of budget is more important than loyalty.
6. Multi-faceted: customer experience is measured by functional and emotional (social and personal) judgments related to the customers’ expectations.
7. Operational: customer experience is shaped by all the contributors to an organization’s processes, policies and culture, in addition to the physical product or service associated with the customer’s need.
8. Integrative: customer experience is impacted by the degree of alignment among departments, technologies, channels, etc.
9. Anticipatory: customer experience is ongoing, where the present and future are equally or more important than the past.
10. Transparent: customer experience sees through the solution provider’s motives and intentions, and favors genuine sincerity for the customer’s well-being.
Customer Experience Management Success Factors
Customer experience management is a dedication to serving customer needs from their perspective. Customers make paychecks possible, so businesses exist to serve a customer need that results in a profitable revenue stream.
Customer experience is defined entirely by customers, but the solution provider defines customer experience management (CEM). The customer is the judge of whether the experience was acceptable or stellar, or not; CEM seeks to understand the gap between desired and current experience as seen from the customer’s viewpoint, segmented by the customer’s circumstances. Then CEM solves the gap holistically and anticipates the evolving needs of the customer to prevent future gaps.
CEM has evolved to a more mature, customer centric field with roots in total quality management and customer satisfaction, and metamorphosis through customer loyalty, customer relationship management (CRM), experiential marketing, and word-of-mouth marketing. CEM encompasses all of the above, with an operational emphasis on enterprise-wide engagement for alignment of what you do to your customer’s priorities.
81% of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition, according to Peppers & Rogers’ 2009 Customer Experience Maturity Monitor study. If your organization has become disillusioned with customer-focus initiatives, rate your historical use of these essential tools for initiative momentum:
- Executive sponsorship
- Formal business process for CEM
- Employee empowerment & engagement
- Organizational learning (knowledge management)
- Quality tools (Pareto, fishbone, etc.)
- Systems thinking
- Change management
- Internal branding
- Recognition and awards
- Incentive pay
- Balanced scorecards
- Relationship skills training
Best practices in customer sentiment monitoring differentiate between enablers of customer experience (the firm’s solution) and customer’s desired outcomes, focusing feedback mechanisms on the customer’s world rather than the company’s world. Best practics also include:
- Identify all the influencers on the buying decision (initiators, approvers, users, buyers, influencers, gatekeepers, decision-makers)
- Collect voice of the customer from all of the influencers on the buying decision
- Monitor customer perceptions of business transactions
- Monitor customer perceptions of overall business relationship
- Involve executives in objective listening sessions with customers
- Analyze lost sales
- Track positive and negative word-of-mouth
- Resolve customer complaints systematically
- Integrate customer feedback sources
- Analyze integrated customer data
- Communicate resolution of customer complaints
- Communicate improvements spurred by poor survey ratings
Best practices create company-wide understanding of customers’ priorities and value, including:
- Establish a single view of each customer across divisions and regions
- Stream relevant customer feedback to all parties in the company
- Calculate customer lifetime value
- Segment customers based on lifetime value or customer experience parameters
- Use customer metrics to evaluate organizational performance
- Include customer metrics in balanced scorecard
Best practices in customer centricity help keep customers’ well-being at the center of everyone’s thinking, decisions and behaviors, including:
- Use customer feedback to guide annual operating plan
- Review business processes from customer perspective
- Use customer metrics in performance reviews
- Reward customer experience improvement in team recognition
- Align incentive pay to customer experience metrics
- Create department-level action plans to improve customer experience
- Listen to customer needs prior to product development efforts
- Base strategic decision-making on customer experience or lifetime value segmentation
- Base front-line employees’ decision-making on customer experience or lifetime value segmentation
- View customer experience management as an ongoing journey
As the dynamics in the customer’s world are constantly evolving, an insatiable curiosity about customers is a key to success. Company-wide alignment with customers prevents waste (improves profit) and prevents customer hassles (improves organic revenue growth).
See the blog series describing 10 essential characteristics of Customer Experience. Note: call for participants in the 2nd Annual ClearAction Business-to-Business Customer Experience Management Benchmarking Study will take place May 11-July 11, 2011. Announcement of the study report will be in July 2011.