Throughout our work in designing and deploying customer experience strategies, we often come across a sad phenomenon. We receive calls from customer experience professionals who are seeking help. For many of them, this is a first time launching a customer experience and they have absolutely no experience in it. They are fishing for ideas and seeking frameworks and references to speak to and then comes the critical moment. This is the moment of truth when we discuss the kind of help they need. And you can hear them squirming and eventually saying “we don’t really have ANY budget.”
We always feel bad for them and provide whatever we can to help them out. The new book Customer Experience Strategy was written with these customer experience practitioners in mind. We wanted to provide them with clear and complete step by step blueprint for success. But there situation raises a much bigger question.
• If you were made responsible for customer experience and were given zero budget to work with, are you set up for success?
• Is there ANY major initiative in your company, when the CEO expect real results that is not funded?
Reading all the posts in CustomerThink and other sites, one would assume that Customer Experience and customer strategies are the most important next to the ending the war in Iraq and the new US healthcare reform. So why is it that we have so many customer experience practitioners left stranded with unfunded initiatives? How come all this energy is not translated to real, financially based commitments by companies? What are we missing? What are we not doing right? I am opening it to a conversation please post your experiences, opinions, and ideas.
Lior, I agree with your sentiments – there’s not much logic in being a cheapskate about customer experience management. (Additionally, tons of free information (e.g. blogs, webcasts) has been generously provided by consultants – why not have compassion and common courtesy during this recession and be willing to pay them for adding value to your cause!) Paradox abounds when it comes to customer-centricity … for example, Forrester’s 2010 State of Customer Experience survey of 141 executives from large North American firms reports that 90% say customer experience is very important or critical to their firm’s strategy in 2010, yet the number one obstacle in 2010 is lack of customer experience strategy; in 2009 it was lack of budget, which has dropped significantly as an issue (according to this study).
And Strativity’s 2009 Customer Experience Management Benchmark Study of 869 corporate executives worldwide says that companies which increased their customer experience investment in the past 3 years, compared to those that have decreased their investment, report satisfaction scores that are 60% higher, and are 30% more likely to have attrition rates of 5% or less.
Customer lifetime value is not a new concept, but it’s overlooked as a quantification tool for the customer experience funding business case, and as a guide for executives’ strategic decisions and front-line employees’ tactical decisions, on an ongoing basis. Customer value quotient is another calculation that helps strategically align the organization to customers.
Perhaps managers assume they can rely on their own perceptions as customers to guide them, but it seems more likely that selfish and/or short-term preoccupations preclude a systems viewpoint and holistic decision-making. For example, Peppers & Rogers Group’s 2009 Customer Experience Maturity Monitor reports that only 42% of companies agree that they can do what is right despite the pressure to make current-period financial numbers. For managers, I ask, who really funds your company … stockholders or customers?
Customer experience strategy should approach customer experience as a life-long journey:
– Defining customer relationship management as a two-way street that requires mutual respect and rewards (between company and customers);
– Replacing arrogance with a never-ending curiosity about customers’ viewpoints, and
– Embracing customer experience competencies as a smarter way to make customer experience an enduring competitive advantage.
Lynn Hunsaker helps companies improve customer data ROI, customer-centricity and customer experience innovation. She is author of 3 handbooks. See ClearAction.biz, Twitter.com/ClearAction, Facebook.dj/customerexperience.
Lior,
You raise an important point and have identified the fundamental challenge faced by many newly appointed Customer Experience Executives ‘How to get the executive support and political power to really make a difference?’
In order to help our clients with this challenge we have developed two key approaches:
1) The first is the simplest, what we call the ‘Power Of One”. In other words if you were to take a simple business KPI for the company concerned and improve it by ‘just one’ through delivering a better customer experience what impact would that have on the financial returns? For one of our clients, a luxury retailer, we calculated that if each sales assistant were to convert ‘just one more’ customer each week through a better experience it would produce incremental sales of $10m. Given that the cost of the CEM programme was in the region of $.5m this becomes a ‘no brainer’. Another example, we calculated that if one of our clients in the hotel sector improved their experience so that they could increase their room rate (ADR) by ‘just one more’ dollar, revenues would increase by over $7m p.a. In the absence of a detailed ROI analysis this becomes a powerful and compelling call to arms for the executive group.
2) However, for those clients requiring a bit more persuading we have designed our ‘CEM+Calculator’ which produces a very accurate forecast of improved revenues through improving customer satisfaction from X to Y. This software utilises actual current sales and satisfaction data and then using the latest thinking around NPS as well as our own research, calculates the financial return of the CEM initiative over what ever period we choose.
Of course neither of these two methods replace ‘passion’ and ‘vision’ and, without these, the leaders of organisations wishing to embark on a CEM strategy are likely to come up short in my experience.
Regards,
Shaun Smith
Lynn and Shaun,
Thank you for taking the time to comment on my post. I believe that there is a significant body of research that supprot the financial logic behind developing and deploying a customer experience strategy. We were involved in developing some of it. Additionally, we published a complete business case guide – Economics of Customer Experience which we also featured in my latest book.
My thinking is that we ned to help the CE practioners and somehow make our messages heard by the CEOs and managing directors. It seems as they are the ones coming into these initiatives with the unrealistic expectations.
It often feels as we are preacing to the choir in forums just like this one. we are all cnvinced. It is the senior leadership that we need to convert. In that regard, the more published out there the more we will break the glass cieling and reach the senior executives level. so thank you for all your efforts in promoting and educating the market.
Lior Arussy
Lior,
I have first-hand experience with the challenge of being put in charge of a customer management program for a $7 billion enterprise without any funding. And I can tell you, I remember sitting in my office wondering what am I going to do now? How am I going to make this program successful without any resources? I quickly came to the realization that the leadership team did not fully understand the scope or impact of a successful CEM program. Given that this field is still relatively new, there is a considerable lack of awareness about what it means and the rationale and business case for investing in such a program.
My strategy was to develop and facilitate a training program to educate the entire leadership and management team on best practices, case studies, models, etc to raise their level of awareness and knowledge. With a greater understanding of the potential opportunities for growth and financial gain, the leadership team was more prepared to make an informed decision about investing and allocating the appropriate resources needed for a program of this nature. As a result, the CEM program was fully funded and is still in operation today after six years.