Original Publication: Customer Management Insight - June 2008
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Every business, every industry is unique. But every business has customers and wants to retain, up-sell and cross-sell their customers and have their customers act as advocates for their business. While our consulting regarding customer experience is fluid, reflecting the idiosyncrasies — constraints, opportunities and challenges — making every situation unique, there are key commonalities in the general issues and broader objectives of these research and marketing efforts that cut across virtually all business models. Drawing upon our personal and corporate experience, both as researchers-consultants and corporate practitioners, following are some of the practical issues and considerations companies face when assessing the customer experience.
Organization Commitment is Key
While different companies may march to the tune of different drummers, market leaders march to the tune or Voice of the Customer. Customer (and prospect) research should be all about understanding the Customer Experience as seen through the eyes of the customer, bringing the Voice of the Customer (VOC) into the organization as a critical input to instruct decision-making. Whether the ostensible issue is about price, product, channel, packaging, brand, customer service or any other facet of marketing, the underlying concern is how to most profitably retain and cross-sell existing customers and capture new customers. Theirs are the voices that matter.
To be cost effective and high impact, however, VOC initiatives need to be structured and planned. All too often firms misinterpret the mantra of VOC to mean that more surveys are better than fewer surveys; more decentralized research projects are better than fewer centralized and coordinated research initiatives; and that asking customers more questions more frequently is better than fewer points of inquiry. The result often is an inefficient cacophony of research activities spread across a wide swath of line and staff units in which the whole, ironically, is less than the sum of its parts. This approach often results in customer backlash against frequency of contact with little perceivable value and lower quality, tactically oriented projects that swell research expenses. VOC initiatives are most successful when there is organizational “buy-in” at every level and when those initiatives are aligned with the organization’s strategic direction, internal/operational metrics and business initiatives. This typically entails ongoing tracking and assessments, as well as discreet stand-alone projects.
Customer Priorities and Opportunities Must Be Aligned With Business Initiatives
Specifically, our objective in planning VOC initiatives is focusing on the information and analyses that will help instruct decision-making to drive business performance. At a minimum, these analyses identify the needs and top priorities of customers. Ultimately, the alignment of this information with business activities and metrics enhances the return on investment (ROI) on actions taken. Targeted actions yield a greater ROI and also lead to more meaningful impacts on strategic goals and initiatives over time.
Figure 1 provides a general illustration of how the systematic application of customer information and insights should help fuel corporate strategies. To support this type of approach, customer information must be gathered across a wide range of relationship aspects that directly inform business activities and metrics.
Figure 1. Factors That Influence Strategic Goals
Theory Must be Turned Into Action
There are some obvious ways to start turning theory into action. However, customer loyalty is not simply:
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a metric
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an attitude at a given point in time
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a frequent purchaser/user
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membership in a club or program
Rather, consider customer loyalty in these terms:
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It is a state of mind that occurs in a customer when a company fully delivers and often exceeds on its promise to the customer. An experience that, repeated over time, will lead to customer advocacy.
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It can result in a disproportionate share of wallet/business and a fundamental belief that an organization can meet tomorrow’s needs as well as today’s.
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It is a “reward” granted to a business for outstanding performance and can result in sustained profitability.
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True loyalty cannot be manufactured in the marketing and sales department or won solely through incentives. It is won through consistency of experience and the ability to deliver on promises made.
Brand Positioning Should Establish the Promise to the Customer
1. Loyalty starts with brand positioning.
Brand positioning is a promise that is made regarding a product, service or experience. Assessing the degree to which the promise is delivered and the brand perception is enhanced and reinforced is particularly vital in environments where channel partners, subcontractors and distributors are necessary and when customers form “communities” with regular means of communications and interactions, such as specialized professional associations, publications and conferences.
Experience Is a Function of People, Process, Product and Service
2. The experience a customer has is a function of people, process, product and service performance
(see Figure 2). Alignment of customer strategies or linkage with these critical elements is essential, yet very complicated for some organizations.
Benchmarking and Goal Setting Become Critically Important in Competitive Environments
3. Experience, and the evaluation of it, is usually tempered by the competitiveness of the environment.
Most business metrics gauge the progress and success of an organization relative to its peers. Gathering intelligence about the competition and how well it is delivering against the promises it has made is fundamental to benchmarking and goal setting. One of the best ways to establish priorities is to understand what is critically important to the customer and how well the organization is performing relative to the competition.
4. Benchmarking and Goal Setting are fundamental to the ongoing focus of customer loyalty, particularly in environments that are faced with the emergence of new technology.
Both of these fundamental practices have been routinely applied in the context of traditional competitors. But as technology changes and the customer experience leapfrogs that of the recent past, the competitive set expands either in the names and types of players and/or through the delivery of new and different products and services.
The 80/20 Rule is Still in Effect Today
5. Quantifying the financial impact of a given customer either at the segment or the account level, whenever possible, should be a critical input into decisions that involve the identification of business priorities and resource allocations.
This is the pot of gold: Understanding the contribution of a given customer or a given customer segment is becoming more and more critical as resources continue to dwindle.
Furthermore, continually updating information such as share of wallet/business, scope of relationship (breadth and depth of product/service lines utilized) and willingness to endure price premiums is critical business intelligence that should drive levels of service delivery and product availability, as well as predictive models of customer behavior.
6. Primary and secondary sources of customer feedback should be designed with the end result or the desired outcome in mind.
Sources of information should be designed to help predict a desired outcome, update customer information and capture the latest competitive intelligence all from the source first-hand.
This means that careful consideration should be given to any and all types of research that is executed – its purpose, its linkage, its support and its ability to better inform the organization about the customer experience in a relative setting.
Employee Awareness and Buy-in Are Essential
7. Gaining employee awareness, buy-in and ownership is critical to the success of future action planning and implementation.
We often recommend the creation, very early in the process, of a cross-functional team to take ownership of the research and subsequent improvement efforts. Such a cross-functional team should consist of members responsible for all functions directly and indirectly touching customers, including Marketing, Sales, Customer Service & Support, R&D, Operations, Finance and IT, for example. To appropriately launch and maximize the success of these initiatives, we recommend the development and institutionalization of a communication plan to position them with customers and employees worldwide. The focal point of the communication should address the purpose of the measurement activities, the value placed on objective feedback and the benefits the customer will recognize over time by participating.
Affirming Customer Expectations Creates Opportunities to Market Initiatives
8. The flip side of employee communications is a customer communications strategy.
It is important to recognize that by asking for customer feedback in a sponsor-identified approach, customer expectations are likely to be raised. Once customers provide feedback, they are more likely to be watching and waiting for change to occur. At the very least, it is necessary to systematically update customers to demonstrate the continual desire to match offerings to their needs and expectations. In fact, organizations that are considered to employ world-class monitoring systems with respect to customer retention credit over 50 percent of the change in performance scores (year over year) to marketing and communication activities. Advisory councils and committees have been resurrected as representative bodies with which to share ideas and considerations while at the same time offering a gauge of competitive movement and the ability to explore future business needs and challenges. While these committees and councils should not replace more robust initiatives to gather representative customer feedback from a larger audience, they offer value input that can be used in the form of checkpoints and course corrections to direct and inform business initiatives.
Figure 2. Mapping Interactions to Model Customer Behavior
Linda Shea is Senior Vice President and Global Managing Director, Customer Strategies, for Opinion Research Corp. www.opinionresearch.com
