The Evolution of the Customer Experience
Editor's Note. We have invited Wendy Close, CRM Success Expert at salesforce.com, to describe the seven stages of customer feedback evolution. Prior to joining Salesforce.com, Wendy served for more than 11 years as CRM Research Director at Gartner, Inc., where she provided CRM advice to many of the biggest and most successful companies in the world. She spoke at CustomerSat’s recent Leadership Conference. Wendy can be reached at: askwendy@crmsuccess.com
At CustomerSat's recent Customer Leadership Conference, I had the opportunity to interact with corporate visionaries from some of the most admired and prestigious organizations in the world.
These leaders, bearing titles like VP for Worldwide Customer Operations, Senior Director of Customer Advocacy, and Director of Customer Care, are driving their businesses to new heights of customer loyalty and satisfaction. What each had in common was a passion for improving the customer's experience of their company.
What is a "customer experience"? Every organization makes an impression of some kind, virtually every time they interact with a customer. Do your customers leave these experiences smiling — or shaking their heads? Do your customer experiences build loyalty, or erode it?
Customer Experience and Your Brand
Many people believe that advertising and promotional activities are what shape an enterprise's reputation and brand. They're certainly important, yet even more important is the customer experience. In fact, many experts believe your brand is built mainly through individual interactions at customer touch points.
Every time one of your people interacts with a customer, you’re refining your brand. A good customer experience enhances it. A bad one diminishes it. For better or for worse, each customer interaction can alter their opinion of your company.
The importance of the customer experience is clear. Next step: Can you leverage it, act on it, and manage it, to create a positive differentiator for your company? If so, how?
This topic was discussed from the podium and during many informal hallway discussions. After analyzing the common themes among these customer experience management (CEM) experts, we came up with a manageable framework for improving customer feedback systems to produce greater levels of satisfaction and loyalty, which will be outlined below.
Many of these industry leaders articulated detailed management processes and programs designed to measure and improve key business performance indicators. They're interested in answering questions such as how and why a customer is loyal.
- Are your customers rationally loyal because they appreciate the tangible benefits of your products or services?
- Are they emotionally loyal because they love your business and how you make them feel?
- Or is it some combination of the two?
Some experts have confirmed the connection between employee loyalty and customer loyalty. In response, they have created the kind of work environment and employee behaviors that score high on the American Customer Satisfaction Index (ACSI). Imagine the business value of having the ability to predict which bank branch or sales territory will attain the highest levels of customer satisfaction.
Some companies are using statistical modeling to calculate the value of a new prospect, for example, or predict a customer’s defection in advance, giving them time to intervene and not only save the account, but actually grow it. All of these activities depend on accurate customer feedback and intelligence to succeed.
Seven Stages of Evolution
After analyzing the common themes among these CEM experts, we concluded that it is possible to guide your customer feedback systems through higher levels of evolution, in order to produce ever-higher levels of satisfaction and loyalty.
Our framework comprises seven generations or stages. Each is a key milestone on your path towards great customer experiences. The seven stages need not occur in exact order. For example, generations 4 and 5 could happen anywhere between generations 1 and 6.
Generation #1: Start a customer feedback program. Most often, the first step toward improving the customer experience is to start surveying customers. The best time to ask for feedback is as soon as possible after a customer service or support interaction. Get it right where it matters most by starting with complaints management and customer service. Your focus should be:
- Collecting transactional customer feedback across multiple customer touch points (e.g., live service agent, web self-service)
- Analyzing its meaning, and then
- Acting on it
Generation #2: Launch a customer relationship survey to monitor, measure, and improve all key areas that impact the customer experience. This should be done on a quarterly or semi-annual basis. (If you have less than 500 customers with one or two contacts per customer, survey semi-annually, if you have more than 500 customers and multiple contacts per customer, survey quarterly.)
Generation #3: Begin employee satisfaction surveys. Keep a keen focus on any issues that impact your employees' ability to serve their customers, e.g., making sure they have the right tools, systems, processes, and training. For even deeper insights into predicting customer loyalty, analyze the correlation between employee satisfaction and customer satisfaction.
Generation #4: Connect it to compensation. When executives in an organization get serious about customer satisfaction scores, they’ll tie a percentage of executive and employee bonuses to achieving certain overall scores. For example, an overall average customer satisfaction score of 6.5 to 6.99 (out of ten) might mean a 50% bonus payout. Higher scores equal higher rewards. Using real-time dashboards to monitor customer satisfaction, these firms are proactively managing executive call campaigns to key accounts to influence loyalty. One note of warning: Maintain a "light touch" linkage between satisfaction scores and incentive compensation. Otherwise, executives may be tempted to tamper with the measurement system.
Generation #5: Use it in marketing. When an organization’s ability to analyze and react to customer intelligence has evolved to market-leading levels, they start using their customer satisfaction data in marketing and sales initiatives. To strengthen its credibility, an organization will often seek certification by an independent standards organization like J.D. Power and Associates and its Technology Service and Support certification for example. Validation by a globally accepted third-party carries greater credibility in the marketplace. These awards are exhibited on Web pages and other marketing materials to brand the organization as one that provides a superior customer experience.
Generation #6: Share your knowledge with partners. As an organization continues to evolve, it begins sharing its knowledge of designing and managing the ideal customer experience with its corporate partners, so they can replicate the success. The end result is an ecosystem of suppliers capable of delivering high-quality customer experience on behalf of the organization. This level of customer experience management requires sharing a lot of customer feedback with your selling and servicing partners. Not surprisingly, it also demands a high level of trust.
Generation #7: Take it back to the customer. At this level, the organization has really opened up the dialogue with customers and is now providing "feedback on the feedback." That is, they're sharing the feedback-driven changes they're making (or not making) with the companies who provided the original feedback. While most companies do collect customer feedback, few ever share it with their customers.
In fact, research shows:
- 95% of companies collect customer feedback.
- 50% share the findings with their staff.
- 30% base decisions on customer intelligence.
- 10% use it to deploy new services or improve existing ones.
- But only 5% ever go back to the customer and tell them what they’re doing with the feedback they provided.
This is a great opportunity to differentiate yourself from competitors. CustomerSat and other companies that specialize in customer feedback report that, on average, it can reduce customer defections by 2-3% per year.
Research shows that customers whose complaints are resolved satisfactorily generally return higher customer satisfaction scores than customers who didn't report any problems. Of course, some executives believe actions speak louder than words. "Just fix the problem", they say, instead of telling customers what they’re going to do. Others seize these opportunities as a chance to delight the customer and upgrade the customer experience in an instant.
No matter which approach they embrace, companies that have achieved the highest levels of customer experience management readily share the results of customer satisfaction surveys with their customers. Some even create portals that allow the customer to monitor its internal level of satisfaction — and hold the supplier accountable if it slips below a certain level of service.
So — which level of this evolutionary ladder is your organization currently operating on?
If you're executing on all seven levels, the executives we spoke with at the CustomerSat Leadership conference agree: Your organization is providing a world class customer experience. Even better, you are well positioned to continue reaping the financial benefits.
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