Inside this Issue: 

• ViewPoint:  Online Customer Research Is Evolving into Customer Experience Management 
• 2001:  Focusing on Customer Experience Management
• CustomerSat CEM Survey

ViewPoint

ViewPoint, a new regular feature, will focus on presenting the newest trends, technologies, and strategies in managing customer relationships.  We begin this column with an excerpt from the December issue of Research Business Report by John Chisholm, CEO, CustomerSat, Inc., where he looks at the future of customer research.

Online Customer Research is Evolving into Customer Experience Management 

In the foreseeable future, customer satisfaction management will continue to evolve into Customer Experience Management (CEM) systems that go far beyond the previous online surveys systems.  Continuous, automated research will become increasingly critical in facilitating and driving customer relationships and experiences.  

By deploying real-time CEM systems that gather and correlate behavioral as well as attitudinal data, companies will be able to predict, for example, what Web pages most strongly drive customers' return-to-site and re-purchase intentions -- predictions which can be rapidly validated or rejected through the measurement of actual customer behavior.  Brief, dynamically-generated questionnaires, made intelligent by rich content, will ask for only the information most needed from each customer, thus preserving the most precious resource:  the customer's time.  Surveys will be split up and distributed across multiple sections of web sites, across online interactions and business processes, including those using phone, online purchases, self-help, chat, and co-browsing, to be minimally intrusive.  Attitudinal and behavioral data will be aggregated, processed and shared by and across those websites, interactions, and business processes to glean every possible insight, all for the purpose of making automated interactions most effective.  Customer satisfaction and experiences will be managed throughout the customer lifecycle, from "cradle to grave."  Fuzzy logic, a promising 1990s technology that has yet to reach full potential, will make a come-back, helping CEM systems better mimic human responses, acting like very sensitive salespeople and consultants who perceive subtle nuances in human behavior and attitudes and respond accordingly.

CEM systems will automate many forms of action and interactions based on customer feedback, including the ability to:

• Directly address satisfaction concerns, such as providing timely apologies and even special offers to compensate for unsatisfactory service.  

• Use survey responses to fine-tune respondent incentives, making incentives both more effective and cost-effective.  

• Offer intelligently-targeted information and promotions, again making full use of survey feedback.

These offers will be presented to the customer immediately after feedback is provided, while customers' eyeballs are still online, or their thoughts still focused on a recent service experience, maximizing the offer's effect.  Automated promotions based on survey feedback, however anonymous, may trouble traditional market researchers and further muddy the boundaries between Market Research and Direct Marketing. Regardless of these concerns, however, companies will increasingly rely on such techniques to defray the costs of and directly generate revenue from these more complex customer research processes.  Over the next year, expect to see this capability added to CRM and other IT systems and services that directly touch the online and offline customer.

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   2001:  Focusing on Customer Experience Management 

Over the past decade, businesses have deployed various technologies and strategies aimed at maximizing revenues and improving ROI.  Starting with the deployment of Enterprise Resource Planning (ERP) back-office solutions, companies sought to streamlined internal processes in order to increase employee productivity.  This would ultimately improve ROI. More recently, the move has shifted towards a more customer-focused view of the organization, with the proliferation of Customer Relationship Management (CRM) systems within enterprises both large and small.  Focused on the front-office solution designed to enhance customer acquisition, CRM systems – including custom "home-grown" systems, to vendor-supplied solutions from Siebel, Peregrine, Remedy, Vantive, Onyx, NAI, and more, have proved to be an invaluable way to track the relationship between the company and the customer.  

As the Internet has made consumers ever more aware of the expanding options in buying products and services, the emphasis businesses place on managing the total customer experience is increasingly critical to the corporate bottom line.  The dynamic created between the customer and website visitors (or potential customers) and the corporate entity becomes a key factor in both B2B and B2C business models.  This trend affects every industry and type, from traditional brick & mortar, to clicks & mortar, or dedicated eRetail companies, as they must effectively deal with an ever-demanding constituency to assure their future survival and success. 

According to the Henley Management Center, Telecultures 2000 report, 75% of customers would take their business elsewhere if a single call is handled badly by an organization.  Customer expectations appear to be rising as their options increase. Not being recognized or having to constantly repeat information when calling in for service, or not being recognized as a long-standing or premier customer is cause for high dissatisfaction and frustration.  Customers now demand flawless handling of their orders, service calls, and delivery, over the entire range of contact methods (email, phone, online chat, in-person visits, etc.), as well as over time.

A key trend and feature already evolving in the new millennium is the evolution from Customer Relationship Management to Customer Experience Management.  Where ERP looked at improving internal corporate productivity and CRM expanded the viewpoint to managing the customer relationship, CEM considers the importance of maintaining a loyal customer base by measuring and managing all aspects of the customer experience with the corporation, both online and offline. 

Customer Experience Management  
Customer relationships are vital corporate capital.  This capital relates directly to how well a business expands customer relationships by analyzing the number of active customers and how long each has remained a customer.  Product-centric companies are understanding the necessity to transform themselves to being customer-centric, deploying new CRM information systems and strategies to realize this directional shift.  Retailers, such as the Gap, Inc, that previously focused on profit per square foot have reset their view on increasing profits per customers. 

The number of hits per page on a website, or visits per store are no longer the basis of currency in the customer economy --  it is now loyalty and advocacy.  By building relationships through continuous, positive experiences, businesses build profits. The concept of focusing on customer attitudes and behaviors is not new.  In Customer.com by Seybold & Marshak’s in 1998, they urged organizations to own the customer’s total experience, taking responsibility for developing a holistic view of customer behaviors.  Customers, they argued, should always feel as if they were receiving personalized service, across all contact channels.

Lifetime Customer Relationships
Managing customer contacts across transaction points must be consistently performed throughout the entire customer lifecycle, across all channels. Tracking and measuring satisfaction levels at each interaction point is critical to building a comprehensive understanding of customer actions as well as their perceptions of these interactions.  New technologies and strategies are required to allow consolidation of customer feedback and transaction data from multiple transactions, occurring across distribution channels, over time.  

Managing this data becomes more complex with the rise of the Internet and eCommerce.  Businesses are relying more and more on their websites to reach new customers, increase sales, deliver technical and customer service, provide information, and more.  Consolidating the offline as well as online customer feedback and transaction history throughout the customer's lifetime becomes an increasingly difficult and critical process. 

1. A customer, we'll call her Maria Garcia, receives a direct mail piece which pushes her to Electronics R Us' website for a special promotion for a new product. 
2. She visits the provided URL, and browses the special offer section, and completes an online purchase by filling out the forms and submitting the order.
3. She awaits the shipment of her order.
4. The order arrives late, and is not the product requested.
5. She phones Electronics R Us' s customer service department, and is transferred to the fulfillment center. 
6. The order is tracked, and re-sent to Maria.  
7. When it arrives, she has trouble installing the electronic device, and calls technical support. She receives instructions, and is provided a URL for even more information.
8. She then visits Electronics R Us' retail store where she makes several purchases.
9. Over the course of the next few months, she makes another online purchase .
10. She receives a refer-a-friend offer, and refers a co-worker.
11. The co-worker purchases a product from Electronics R Us online.

This scenario demonstrates how many opportunities exist for customer interactions during a limited time period.  When extended over a much longer time span, the model increases in complexity.

Continuous Customer Satisfaction Key to Lifetime Value 
As customers’ demands rise, the importance of assuring complete satisfaction with their many interactions becomes a vital part of managing the total customer relationship.  Continuous measurement of satisfaction on this level demands an ongoing process that is integrated into the company's CRM/Contact systems and processes.  

According to the Seybold Group in their study, Eight Steps to a Great Branded Customer Experience, measuring what matters most to customers is a key step in building a successful, long-term customer relationship.  By asking customers what they consider important rather than measuring factors which the company sees as affecting their businesses, will build customer loyalty and lead to success. Deploying a continuous, customized feedback program that allows a business to uncover what customers are thinking, like/dislike, want, and expect, that same company can then implement programs and make changes that actually benefit the customer.

Looking at the Customer Interaction Points described above, there are several approaches Electronics R Us can implement to gather feedback from Maria Garcia at each interaction point.

The transaction interaction chart showing the deployment of CustomerSat's CEM feedback system now looks like this:

Customer Satisfaction Affects ROI  
Measuring customer satisfaction and taking action to solve both the immediate as well as longer term issues are critical ingredients in building customer loyalty and advocacy.  While loyalty both predicts and measures the customer value in amount of business generated over time, advocacy represents business generated from that customer -- i.e. referrals.  Both are essential to expanding a profitable customer base.  

By tracking and measuring the complete customer experience, ROI can be more accurately calculated. In the above example, by quickly discovering Maria's issues, arming key customer-facing employees with that data, and taking the corrective actions Maria considered most important allowed Electronics R Us to not only retained a dissatisfied customer, but they also gained a second customer.  As Maria's customer value increases, the profitability from deploying the CEM processes and direct mail campaign. 

Electronics R Us can also easily identify their most valuable customers.  New research has discovered that while in the past, 80% of business revenue came from 20% of existing customers (the 80/20 model), this is shifting.  Current estimates show that 90% of revenue is generated by only 10% of existing customers. Identify this 10%, and building special programs and offers that meet the needs of these loyal customers has never been more important to any business' success.

Meeting Customer Demands -- Key to 2001 Success 
To meet the growing demands of all customers – eCustomer and “traditional” customer alike – companies are moving to involve the customer’s ideas and attitudes in their business strategies.  This evolution towards a customer-centric view of the economy necessitates the adoption of new technologies and processes.  The ability to not only measure customer satisfaction levels at all interaction points, but to utilize customer feedback to provide immediate corrective action, arm sales & service representatives with customers’ provided feedback, and base offers and communications on the customers’ own selections, is a powerful way to build strong and lasting customer relationship.

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  CustomerSat CEM Survey

Give us your thoughts about the key issues facing companies this year.  Is CEM where your company is moving?  Do you think this is an important issue?  How does a CRM system enhance your customers' experiences? Results will be posted in next month's Connections.  

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