Sometimes a CEO takes the reins at a company that’s in such great shape, I can’t help thinking, “Wow, it must be great to be that guy!”
And then there’s Dan Hesse, CEO at Sprint. Given the shape that Sprint was in when he got the top job in 2008, I was thinking more along the lines of, “Wow, he must be working off a karmic burden!” That’s because back then, the company had the lowest customer satisfaction ratings of any of the major wireless carriers. As a result, it was bleeding cash from high customer care costs and lost subscribers.
Faced with this mess, Dan decided to focus on systematically improving the quality of Sprint’s customer experience as a way of improving Sprint’s bottom line. We were so impressed by his efforts that we included a case study about Dan in Chapter 2 of our upcoming book, Outside In: The Power Of Putting Customers At The Center Of Your Business.
The book won’t be out until August 28th, but you don’t have to wait until then to get a sense of how effective Dan’s efforts have been. That’s because on May 15th, Hesse gave an address at Sprint’s shareholder meeting, and he had this news:
To be candid, I originally agreed to give the speech as a favor to Jim, whose inspirational story kicks off the chapter on chief customer officers in our upcoming book. I didn’t know what to expect of the event and somehow imagined that when I joined hundreds of doctors, nurses, and other caregivers in a big auditorium, I’d get trapped inside an episode of House — and I’d be the only one who didn’t know what the other cast members were talking about.
Was I ever wrong. The event was an extraordinary experience from beginning to end, and the content was accessible to anyone who works to improve customer experience, regardless of industry. As someone who helps put on Forrester's Customer Experience Forum, I even got a little envious.
A few things leapt out at me from the sessions I attended:
Executive-level commitment to customer experience as a business strategy. Dr. Delos “Toby” Cosgrove, CEO of Cleveland Clinic, and Dr. Kurt Newman, CEO of Children’s National Medical Center, appeared together on a panel. It was clear from their answers to moderator and audience questions that both of them connect the dots between high-quality patient experience and the bottom line.
Although the book won't be available to the general public until August 28th, attendees of our Customer Experience Forum at the end of June will get digital copies of the manuscript. They'll also hear keynote speeches from some of the people who appear in the book, like Kevin Peters, the president of Office Depot North America; Laura Evans, chief experience officer at The Washington Post; and Laurie Tucker, senior vice president of corporate marketing at FedEx.
If you'd like to get a preview of some of the concepts in the book, check out the video below — and then stay tuned for more announcements!
SugarCRM was kind enough to invite me to its analyst day and conference — a three-day event packed with product, strategy, customer, and partner information. The firm’s focus was clearly on its momentum into the enterprise. Here are my thoughts:
The CRM market still has room to grow. Sugar used IDC’s numbers to project CRM market growth: $18.74 billion for 2012, $19.97 billion for 2013, and $21.37 billion for 2014. Even though CRM vendor solutions are mature, the CRM market has not stagnated.
The SugarCRM 6.5 product. Today, SugarCRM has 1 million users, has seen 11 million downloads, is used by 80,000 organizations, and has 350 partners on five continents supporting the product. Its newest release focuses on usability and performance enhancements. It offers simplified navigation, an enhanced UI design, a new search framework with integrated full-text search, new calendaring and scheduling capabilities, IBM platform support, and deeper integration with third-party apps. Although the product lacks advanced social features and robust analytics, it does provide solid, well-rounded CRM capabilities.
The open source focus. Open source is more than a movement. It provides results by allowing its 30,000-large developer ecosystem to evolve the product in line with customer demand. “Open” is also part of Sugar’s culture — for example, pricing is readily available on its website, and you can try the product for free.
Customer service leaders know that a good customer experience has a quantifiable impact on revenue, as measured by increased rates of repurchase, increased recommendations, and decreased willingness to defect from a brand. They also conceptually understand that clean data is important, but many can’t make the connection between how master data management and data quality investments directly improve customer service metrics. This means that IT initiates data projects more than two-thirds of the time, while data projects that directly affect customer service processes rarely get funded.
What needs to happen is that customer service leaders have to partner with data management pros — often working within IT — to reframe the conversation. Historically, IT organizations would attempt to drive technology investments with the ambiguous goal of “cleaning dirty customer data” within CRM, customer service, and other applications. Instead of this approach, this team must articulate the impact that poor-quality data has on critical business and customer-facing processes.
To do this, start by taking an inventory of the quality of data that is currently available:
Chart the customer service processes that are followed by customer service agents. 80% of customer calls can be attributed to 20% of the issues handled.
Understand what customer, product, order, and past customer interaction data are needed to support these processes.
In the industries we modeled, the revenue benefits of a better customer experience range from $31 million for retailers to around $1.3 billion for hotels and wireless service providers.
What’s behind these impressive numbers? It’s pretty simple, really.
Companies with better customer experience tend to have more loyal customers. We’ve shown through both mathematical correlations and actual company scores that when your customers like the experience you deliver, they’re more likely to consider you for another purchase and recommend you to others. They’re also less likely to switch their business away to a competitor. These improved loyalty scores translate into more actual repeat purchases, more prospects influenced to buy through positive word of mouth, and less revenue lost to churn.
We model the size of the potential benefit using data from real companies. In each industry, we create an archetypal “ACME Company” that scores below industry average in the Customer Experience Index (CXi). We then look at what would happen to ACME’s loyalty scores if it went from below average in the CXi to above average for its specific industry based on the actual scores for companies in that industry.
The Holy Grail of customer experience for many firms goes beyond useful and easy to interactions that create an emotional connection with the customer. That’s not easy to do, but step 1 is creating an experience that is at least enjoyable. Now, before you object . . . I’m not talking Disney-level enjoyable here — just generally pleasant and maybe even a little fun. Two brands that proved it’s possible with high scores on the CXi’s “enjoyable” criteria are:
Thanks for all your thoughtful responses to last week’s post about why companies fail to meet customer needs. Clearly there’s more work to be done in that department, but for now, I want to move on to the next Customer Experience Index (CXi) criteria: “easy.” Many firms claim to be easy to do business with, but which ones got the highest rating from customers?
This year, USAA (bank) and Kohl’s both earned a score of 92% in this category.
For USAA, there is definitely some overlap between its ability to identify latent customer needs and its level of easiness. For example, depositing a check via mobile phone makes the deposit process easier for everyone, not just the most geographically dispersed parts of the customer base. Strong customer understanding also led to creation of the Auto Circle experience, which is designed to make the entire car buying process easier for customers, not just the parts that a financial institution like USAA would typically have been involved in.
As I recently celebrated my fifth anniversary as a Forrester analyst, I reflected on how my coverage area has changed. For the past five years I've covered the web content management (WCM) market. This has been a healthy market, and I still get plenty of interest from my clients on this topic.
But the context of that interest has changed markedly, particularly over the past year. When clients used to ask about WCM, they wanted to know about WCM and WCM only. But these days, they ask about WCM in the context of other technologies supporting customer experience, such as commerce, CRM, and analytics. Our clients have reached a logical conclusion: WCM isn't the end-all-be-all for digital experiences but instead is one piece of the customer experience management (CXM) puzzle.
And the market will continue to evolve in 2012. In particular:
Watch for an avalanche of acquisitions, both big and small. Though larger vendors have multiple pieces of the CXM puzzle, no one has yet put together a complete portfolio. Vendors are still missing some critical pieces, such as rich media management (IBM), commerce (Adobe), and testing and optimization (Oracle, SDL). Watch for the CXM vendors to compete to fill these gaps. High-reaching best-of-breed WCMs such as Sitecore may not remain independent for long.
Contextualization will become the byword. Forget complicated business rules and template schemes. Technology to contextually adapt customer experiences based on user segment, browsing behavior, locale, and device will be high priority. Vendors will make strides so that customers can increasingly take an "automate + optimize" approach: automating contextualization for most experiences and manually optimizing it for a few high-profile experiences, such as home pages.