February 2005

Pay Attention Customer to Experiences

By Syed Hasan, ResponseTek Networks

Years after most major corporations have implemented traditional customer relationship management (CRM) systems, those organizations are still losing up to 30 percent of customers annually, according to some sources. Thus there is legitimate debate about whether or not the truly customer-driven organization has arrived.

After all, how many organizations really understand their customers’ experiences? Do they know what delights and disappoints them? Who is referring them to others? Who is not? Is there anyone within an organization that can answer these questions?

In fact, the answer is mostly “no.” Many organizations that consider themselves to be customer-centric are simply measuring the wrong things. Customer centricity is not a measure of the number of call centers or agents they have on staff — it is a measure of the quality of the customer’s experience.

Part of the problem is that CRM takes a corporate view of customers, focusing on the history of a customer: “Who are our customers, what do they buy, and what should we offer?” Mean-while, it ignores what’s important to the customer (the customer’s experience): “What do we want, what did we get, and what should we get?”

Not only does the company need to determine how customers view it, but that information also needs to be available immediately. The manner in which a company deals with its customers’ experiences is a good predictor of its future financial performance. Because of this, companies should access, review and analyze customer experience information as frequently as they do their financial information.

Customer Experience Drivers
Lack of customer insight and understanding: As noted, customer churn rates can reach as high as 30 percent. Replacing an entire customer base every three to five years would be an expensive task when you factor in the high cost of sales in addition to product development/manufacturing costs. Many companies focus on customer acquisition by investing in ad campaigns and CRM systems, and then spending millions on rebates, incentive discounts, loyalty programs and customer service organizations to keep them. Companies need to know why customers are buying from them or why they are choosing the competition. CRM systems, for instance, are very good at tracking customer data, such as when customers purchase items or what method they used. However, CRM systems do not capture a customer’s experience during this time. Companies need to know what satisfied the customer and if there was any dissatisfaction during the purchasing process. And if so, how will these issues affect future purchases?

No connection between customer expectations and management. Companies often focus on improving customer retention through marketing incentives, loyalty programs and customer service. Many times these programs are extremely inefficient investments if the brand experience is not being delivered properly. Therefore, key stakeholders across an organization need transparency. They need to be able to see, feel and measure the areas of disappointment and to communicate the areas of delight back into their organization. Of course, it’s not enough to simply get that information. There must be strong lines of accountability to ensure the problems get fixed. The problems must be presented in a way that is both measurable and actionable. It has never been so important that managers at every level — right up to board level — see what customers are saying, every day, about the company, and that they be certain everything is being done to get the experience as good as is possible. Where gaps are opening up, where problems are not being resolved, when a customer leaves — they need to be visible, along with the action being taken, to resolve the problem.

No customer communication strategy. Companies spend millions on managing their sales efficiencies but very little on managing the quality of a customer’s experience of their product or service. In such competitive environments, it is critical to manage ongoing customer expectations as they are changing every day. However, process management on its own is not enough; it is important to keep in mind who the customers are, and to establish and maintain an open dialog. Therefore, feedback loops must be established to ensure the customer is kept in the picture. The ideal is to build on previous approaches, but with a real focus on the experiences of customers and how those experiences affect their behaviors. Companies need to let their customers know they are listening. Often, companies request comments of customers, only to not respond to the customers after collecting the information. By responding and letting the customer know his or her issue is being resolved, the customer will feel a connection with the company and, in turn, be more satisfied. The sole purpose of any business is to fulfill the expectations of its customers. It is critical that companies establish an ongoing two-way communication with their customers to encourage further feedback.

Given these customer experience management (CEM) drivers, here are seven pillars that can provide organizations with that competitive advantage:

• Enable customers to communicate with you at the time of their experience. Let your customers provide feedback easily when they are most likely to; i.e., at the time of pain or delight, by providing a convenient (to them) and wide range of channels, whether that is via point-of-sale, a wireless device, the Web, a kiosk, etc.
• Waiting for periodic, centralized reports and analysis is no longer an option. Customer feedback should be collected in a meaningful and structured way for easy analysis. Collect both qualitative and quantitative customer feedback so that it is measurable; then ensure this information is available in a way that is relevant and timely for every level in the business.
• Distribute the right information to the right people at the right time. Route customer experience information immediately to the accountable level of business or individual. Management, product teams, marketing and operations should have easy and transparent access to the customer experience. Ensure that front line employees have information regarding the consistency and quality of service delivery.
• Quality improvements must be driven top-down and bottom-up. To eliminate risk of defection, empower employees with timely and relevant information, as well as with the tools to immediately respond to customers. Remember, knowing who is doing what to improve the customer experience is key to driving change. So monitor this. Then use the voice of the customer to align employees on the need for action.
• Seek continuous improvements in small steps — across the entire organization. Show customers what you are doing to improve. Provide both structured information and efficient tools to rapidly resolve issues and to communicate to customers. The key to customer loyalty is that customers generally feel when you listen and act on their needs. Move away from the black box of customer service. Remember: You don’t always need masses of statistics to drive decision improvement, so remain focused.
• Share learning from front-line issues across your organization — every day. Enable employees to share learning with others as it happens. Increase the pace and frequency at which employees know about recurring issues to promote real-time customer-driven learning.
• Gain insight on trends based on actual customer experiences. Use periodic and real-time insight tools to drive strategic decision making so you know what customers really want. Monitor the quality and consistency of service delivery so you know what they really attained. Ensure insight data are linked to action and workflow tools.

Potential Gains From Seven Pillars
Too often, the successes of initiatives such as CRM are measured only against short-term goals (such as productivity, or revenue metrics; e.g., cross-sell rates). While these short-term goals are certainly valuable, today’s enterprises need to shift focus to a long-term strategy that allows measurement and management of customers in a sustainable and profitable relationship

The Bottom Line
Nobody said that creating customer-driven organizations would be easy. But if you follow these seven pillars of CEM, your organization will realize a virtually untapped competitive advantage that will positively contribute to higher customer satisfaction, an improved retention rate and huge cost savings and sales gains. To increase your chance of success, seek customer experience solutions that can help you achieve these seven pillars.

Syed Hasan is CEO of ResponseTek Networks (www.responsetek.com), a provider of customer experience management (CEM) systems.

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