Customer experience management white paper

CUSTOMER EXPERIENCE MANAGEMENT

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White Paper Contents Obtaining customer feedback in a timely and useable format, helps firms discover if they are missing the mark, meeting, or exceeding customer expectations, and provides insight on where organizational changes need to be made to: 1) increase satisfaction; 2) decrease dissatisfiers and; 3) affect bottom-line results.

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Customer Experience Management INTRODUCTION AND QUESTIONS The ability to understand your customers and to create services and processes that customers’ value is paramount to a firm’s growth strategies. Obtaining customer feedback in a timely and useable format, helps firms discover if they are missing the mark, meeting, or exceeding customer expectations, and provides insight on where organizational changes need to be made to: 1) increase satisfaction; 2) decrease dissatisfiers and; 3) affect bottom-line results.

Customers have a variety of choices for products and services, including software. Brand and product differentiation is extremely difficult to achieve when your success can be imitated by your competitors. Customers have more information than ever before and are able to compare products and services across industries and geographies. As a result, the firm must find ways to set themselves apart so that they can retain customers while developing effective programs to obtain new customers.

The critical distinction between gaining share and losing share for the firm will be the experiences it provides for its customers and prospects during interactions. How easy is it for customers’ to do business with you? How well do you anticipate customers’ needs? Which customers should be offered the best deals because they offer the greatest lifetime value? Is a customer likely to respond to current value propositions and methods of contact?

CUSTOMER EXPERIENCE MANAGEMENT Customer Experience Management is a program that enables firms to manage its day-to-day operations across each customer touch point in order to deliver relevant customer encounters and focuses on the importance of the customer’s perspective. The goal of customer experience management (CEM) is to move customers from satisfied to loyal and then from loyal to advocate.

A firm’s plan for continued growth requires persistent efforts to gain customer perspective. Critical elements of this perception should result in identifying what offer to make to which customers and when and how to best position that offer. This responsiveness takes a firm to the next level in growth strategy by reducing customer churn 1.

Measure the Economics of Experiences Research shows, and our experience supports, that the extent to which customers are satisfied is a top indicator whether or not the business will grow profitably. Economics of customer relationships are measured by determining the cost of a new customer, the loss associated with a defected customer and losses due to customer’s dissatisfaction.

These economies make customer satisfaction measurements fully relevant to the bottom line.

Surveys and polls performed by Global 1000, mega research firms and academic researchers over the years have consistently shown that a “Totally Satisfied” Customer is, on average, from three to ten times more likely to buy from you again than a customer who is merely “Somewhat Satisfied.” These studies include data from over 20,000 customer surveys conducted in 40 countries and they conclude that:  A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer.  A Totally Satisfied customer contributes 14 times as much revenue as a Somewhat Dissatisfied customer  A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied customer contributes.

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Some analysts and industry experts claim that a 5% increase in customer retention can increase profits by as much as 125%.

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Without clearly understanding customer value and the financial implications, motivation to improve the customer experience will not happen. Firms often respond with price discounts and expensive marketing campaigns, where expenses rise and margins fall, rather than getting to the core of customers’ needs and constantly adjusting to meet those needs.  a resolution and lack of first call resolution  real cost and value of customer service

The model should include understanding the costs of:  a complaint or dissatisfied customer 1.

Design and Implement Customer Satisfaction Measures

If the firm decides to implement a customer satisfaction survey, in conjunction with its customer experience management program, it must first determine who will design, administer, implement, collect data, analyze and report.

By designing an instrument to measure both customer satisfaction and loyalty over time, the firm develops tactics that effectively address customer pain points and enhance and reward attributes that delight.

Customer satisfaction metrics serve a critical function: They allow you to measure and monitor performance with respect to the various services and attributes delivered during sales and service processes.

Collecting data from a single touch point within a single customer interaction will not obtain the right data to make customer-focused decisions.

Rather the inclination will be to impose a limited view of the customer on any changes to the process. Measuring the customer’s satisfaction along each stage of their experience coupled with measuring the

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customer’s total experience, helps the firm to not only measure customer satisfaction, but also the degree to which customers will remain loyal.

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Delivering personalized and focused offerings to the right customer is predicated on segmenting customers.

Customer segmentation allows you to align a specific group’s attitudes, characteristics and needs with the appropriate product or service. The failure to segment current customers increases the time and effort in obtaining new customers.

Focused, targeted offerings deliver a much higher impact and return as customers respond to offerings that are relevant and personalized while strengthening brand. Decisions for changes to the sales process must take into account each customer’s likely behavior at each contact point and the relative likelihood of the customer— responding to or rejecting your offer.

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Monitor, Share and Constantly Adjust — Relevance to Whole Organization

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Segment Customers and Make Offers Relevant to Each Segment

Eliminate Dissatisfiers and Discover What “Delights” Customers

Eliminating dissatisfying core elements of the experience alone will not create delighted customers, though it will measurably improve customer satisfaction and decrease the likelihood of customer abandonment. The core elements of customers’ experiences that can have a measurable impact on increasing satisfaction include:

Process Design and Redesign – What aspects of the experience do customers respond positively too? What do they dislike?

Infrastructure and Technology – Does the firm have the infrastructure in place to deliver what’s promised? How easy is it for a customer to get in contact with the firm or a specified individual within the firm? Do various IVR menu’s delay a customer interaction? Does the firm’s web-site deliver the selfservice aspects promised?

Employee Training – Are employees educated on the goals and metrics of your customers’ experiences? Do they have the tools to deliver what’s promised?

Are employees empowered to make decisions to satisfy a customer?

The list below summarizes and highlights a successful customer experience management program:

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 Adapt policies that include customer feedback and act on that feedback

 Satisfaction results are made available to all employees.

 Provide a complete picture of the customer to employees

 Customers are informed about changes brought about by the results of listening to them.

 Provide employees with the power to solve problems  Examine infrastructure and technology tools  Top management and marketing divisions champion these programs.

 Customer satisfaction is incorporated into the strategic focus of the company via the mission statement.  Compensation of all stakeholders is tied directly to the customer satisfaction and customer experience management programs.

 Corporate evaluations should include the company's customer satisfaction ratings

MEASURING CUSTOMER LOYALTY The current trend 2 for companies who measure the whole customer experience is to develop a Net Promoter Score (NPS) to improve the quality of products and services that increase revenue. The technique, popularized by Bain consultant Fred Reichheld, relies on the answer to one question: “How likely are you to recommend a product or service to a friend or colleague?” This replaces cumbersome questionnaires, which Reichheld believes are tedious, provide too much data and, customers do not fill them out accurately.

customer feedback, and new processes put in place.

The NPS is calculated by subtracting positive responses from neutral and negative ones to obtain a score that's a revealing barometer of customer loyalty and satisfaction.

This is useful because of its ability to effectively and accurately represent the underlying data with a single number. The score in absolute terms has value and its change (rise or fall) from time 0 to time 1, time 2, etc. measures the effectiveness of changes made as a result of

THE NET PROMOTER SCORE METHODOLOGY REFLECTS ATTITUDES IN THREE WAYS: 1.

promoters, people who love your product, invest in relationships, and give positive word-of-mouth. –

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passively satisfied; have nothing negative to say, but are at risk of defecting

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detractors They complain and destroy growth.

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Companies such as GE, Intuit, Black & Decker, Ben & Jerry’s, TD Bank, British Airways

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The chart to the above shows the correlation in the U.S. airline industry to revenue growth and net promoter scores.

Proponents of this measurement believe it functions like net worth—the difference between your financial assets and liabilities. The NPS takes your asset; the customers that create most of your cash flow—the 9's and 10's, and subtracts the liabilities, the 0 through 6's. The score is your net worth or the net value of your customer base.

Market Directions uses and recommends a NPS in customer satisfaction surveys developed for its clients. However, we believe that one measurement is not enough. The NPS does not point to specific areas that are causing a customer’s satisfaction or dissatisfaction. We want our clients to focus on the right influencer rather than what they think is influencing customer’s attitudes. Our successful approach requires that the firm identify, measure and monitor each individual aspect of the customer transaction that make-up their whole experience.

THE CUSTOMER EXPERIENCE MANAGEMENT FRAMEWORK To realize this vision and to consistently deliver differentiating experiences to your customers Market Directions recommends: 1.

Measure the Economics of Experiences

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Design and Implement Customer Satisfaction Measures

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Segment Customers and Make Offers Relevant to Each Segment

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Eliminate Dissatisfiers and Discover What “Delights” Customers

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Monitor, Share and Constantly Adjust — Make Relevant to Whole Organization

 Be used as a relationship building tool

SUMMARY AND CONCLUSION

 Segment customers by various behaviors and attributes required to make a sale

Customers do not see the firm as a series of unrelated processes and activities, but rater as a holistic organization that consists of multiple touch points.

Achieving greater customer satisfaction and loyalty through continued customer insight data collection is necessary to identify what offer to make to which customers and when and how to best position that offer. In order for the firm to focus on activities that will have the greatest impact on customers’ experiences, measurements of each customer touch point coupled with measuring overall satisfaction should be put in place. This requires implementation of a formal process which in the long run will:

 Identify the firm’s strengths and weaknesses  Identify customer advocates and ways to create those advocates The benefits of a customer experience management program will be vast for the firm by differentiating you from your competitors and provides a journey to creating a delighted customer that is rewarding to the bottom-line.

 Increase revenues by less churn ###

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ABOUT MARKET DIRECTIONS Market Directions assists companies with marketing strategy, tactics and programs to create interest, demand and recognition for the firm and its products. We do this by compiling and summarizing secondary research and by directing primary quantitative and qualitative research. In addition, to ensure your product is demand driven, Market Directions works with Product Marketing and Product Management to ensure the right mix of features, positioning and price.

Primary research is conducted among your prospective customers, and your customer base, sales, management, engineering, analysts and others in the form of personal interviews, focus groups, surveys, web testing and usability studies. Secondary research includes social reporting, big data analysis and market and industry profiles.

The information we collect aids in making the correct product, competitive, and pricing decisions while minimizing your risk of expensive incorrect decisions.

Please, let’s chat and consider how market research can help you with your marketing.

Market Directions

BOSTON P: 617-323-1862 C: 617-869-4037 www.marketdirectionsmr.com mary@marketdirectionsmr.com

Contact Mary Malaszek, Principal

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