As an avid personal investor I’m often appalled by cable shows that report on the markets as if they were non-stop sporting events. Seriously, how many people care how the NASDAQ or the Dow are doing on any given minute of any given day? But apparently there are enough day traders out there that noon reports from the floor of the New York Stock Exchange are as compelling as half-time reports during the NFL playoffs.
I have to confess that there is one piece of financial analysis that I do look forward to – though in my defense, this is an annual occurrence and not an hourly update. The analysis comes from Jon Picoult, a gentleman who runs Watermark Consulting.
For a while now Jon has been taking the data from Forrester’s Customer Experience Index (CXi) and using it to do a thought experiment. In this experiment he looks at what would have happened if, back when we first published the CXi, an investor had taken two equal buckets of money and created two U.S. stock portfolios. The first portfolio would have consisted of the top 10 publicly traded companies in our index (the customer experience leaders). The second portfolio would have consisted of the bottom 10 publicly traded companies in the index (the customer experience laggards).
In Jon’s model the investor would have held each portfolio for a year, then sold them both and taken his profits (or losses). He would have then used the proceeds to purchase the new year’s leaders and the new year’s laggards, continuing this cycle of selling and buying for all six years that the CXi has been in existence.
Intriguing, right? Even those of us who believe in the business value of customer experience (or in my case can prove it through research) don’t normally look at the impact on stock performance.
We all hear and read stories of terrible customer experiences; like me, you probably have had your own share of bad experiences. And social media has made it possible for these bad experiences to be shared instantly with millions of people. But in our journey through life, we also experience service that exceeds our expectations. And as we read reviews online, we're more likely to see a mixture of both good and bad experiences. For example, I recently posted a glowing review for a B&B in Bethel, ME, even though a few things about my stay would have typically caused me to deduct points. My five-star review was extremely positive because the proprietor had blown away my expectations on service, delivering an experience way beyond any I've had in a five-star hotel.
But excelling at the personal touch in a small-town B&B is far easier than doing it at scale in a multibillion-dollar business. Yet there are companies that consistently deliver great customer experiences. (My colleagues even wrote a book on them). They aren't perfect all the time, but, on average, they are better than their competitors. At Forrester, we identify these companies through our annual Customer Experience Index (CXi) research. Toward the top of the 2013 index, we find companies like Marshalls, Courtyard by Marriott, USAA, TD Bank, Southwest Airlines, Vanguard, Home Depot, Kohl's, Fidelity Investments, and FedEx.
These positive attitudes toward the IT department's performance stand in stark contrast to the views of employees who aren't achieving these outcomes. For example, while 65% of employee advocates are satisfied with the service they receive from the IT department, just 27% of employees not fully advocating for the company share a similar opinion. So what creates this chasm in opinion? We find clues when we look at some of the attitudes employee advocates have about what their organizations allow them to do:
There are six award categories for the Outside In Awards:
Best customer experience strategy.
Best customer understanding program.
Best customer experience design.
Best customer experience measurement program.
Best customer experience governance program.
Most customer-centric culture.
You can find all of the information you need on our Outside In Awards home page. The 2013 nomination forms are all available there, and nominations are due by 5:00 p.m. ET on May 3rd. You can also review this year's timeline, get answers to FAQs, and check out information about past customer experience award winners.
It disappoints me when customer experience (CX) professionals at business-to-business (B2B) companies won’t even consider CX practices from business-to-consumer (B2C) companies.
Sure, B2B firms can learn a lot from other B2B firms: Cisco has an amazing voice of the customer program, Boeing does great work conducting field studies of its customers, and Adobe has a notable CX governance practice. But unless B2B customer experience practitioners want to run the CX race with one foot in a bucket, they should also learn strategy from Holiday Inn and Burberry, customer understanding from Vanguard and Virgin Mobile Australia, and design practices from Fidelity and the Spanish bank BBVA — the list of relevant B2C case studies goes on and on.
There are two reasons why B2B companies should take this advice to heart. First, no industry has anything close to a monopoly on best practices. So unless companies cast a wide net, they’re cutting themselves off from lessons that could give them an edge over their navel-gazing competitors. Secondly, every customer that B2B companies serve is not only a businessperson but also a consumer, one who has his or her expectations set by daily interactions with Amazon, Apple, Starbucks, and Zappos. And those B2B customers no longer lower their expectations when they go to work — especially because work now gets interspersed with their personal lives.
Employee engagement is a hot topic in many C-suites today. There's a growing body of research that says engaged employees are productive employees, contributing positively to the bottom line. Forrester's own workforce research shows those who feel supported by managers, respected for their efforts, and encouraged to be creative are more inclined to recommend the company as a workplace or a vendor. So, we see a debate within the upper echelons of organizations on how best to create engaging workforce experiences which give an employee's contributions meaning, provide the flexibility they require to be successful, and continuously develop the skills they need to serve customers. It's critical that the CIO is at the table during these conversations. Why? Regardless of the talent retention and management strategy, technology will be necessary to help unlock the potential within the workforce.
The CIO at a large software vendor with a reputation for great employee engagement said it best: "Technology is expected, but [business leaders] do not think about how it enables people." Technology is an ambient part of the workspace. Businesses outfit their workforces with a range of gadgets and give them access to numerous systems which facilitate interactions, manage orders, track projects, store data, and more. Of course, deficiencies in these corporate toolkits lead employees to find and embrace things like iPhones, Galaxy Tabs, Dropbox, and Evernote on their own. But has anyone given serious consideration to how these disparate tools come together to help engage employees so they can properly support the customer?
Last month, I was in Europe with a group of customer experience professionals from various divisions of the same large company. Although their expertise was at varying levels, no one was clueless, and everyone seemed highly motivated. About halfway through the all-day session, one of the attendees asked me a question that I’m going to paraphrase here.
After some preamble about the pressures the company was under to increase revenue and profits, he asked, “Given that, when should we put aside the need for profits and fund customer experience projects instead?”
His question surprised me. And I clearly surprised him when I responded, “Never.” I let that hang in the air for a moment so that it could sink in. Then I added, “You should never put aside the need for profits when you fund customer experience projects.”
I could see that people were a little confused, so I went on. “You should only fund customer experience projects that will produce profits. That’s why you do those projects in the first place. And if you have other kinds of projects that will produce better business results, do them instead. But if you take the time to create the business models for your CX projects, you’ll probably find that they’ll produce better ROI than most of the initiatives they’re competing against.”
To be clear, the guy who had asked the question seemed very bright and had a lot of expertise in his area (metrics and measurement). But he had fallen into the same trap that so many customer experience advocates fall into. He wasn’t thinking of improving customer experience as a path to achieving business results. Instead, he was thinking of it just as a generally good thing to do for customers (which it is, but that’s not why you should do it).
Customers want efficient, effortless service from the touchpoint and communication channel of their choice. They want to receive accurate, relevant, and complete answers to their questions upon first contact with a company. Forrester data backs this up: Sixty-six percent of customers agree that valuing their time is the most important thing a company can do to provide good service. Forty-five percent of US online adults will abandon their online purchase if they can’t find a quick answer to their question.
The 2013 CXi is based on research we did in Q4 2012. It reflects how consumers perceived their experiences with 154 brands across 14 industries. If you’re not familiar with the methodology, or just want a refresher, check out “Executive Q&A: Forrester’s Customer Experience Index, 2013.” We put all the nitty-gritty details in there.
But what about the big picture? Of course, there are winners and losers (we name them in the report.) There is a tale of two banks — one whose score jumped up by 11 points versus last year, and another whose score plummeted by 24 points.
Through it all, though, one common theme leapt out:
In 2013, it’s all about value.
Many of the top brands this year, including high-scorer Marshalls, deliver solid customer experience at a manageable price. We saw this dynamic in the hotel space, where Marriott’s Courtyard brand beat out all other hotel brands. And we saw it in the airline industry, where perennial favorites Southwest Airlines and JetBlue Airways once again swept the competition with their combination of great experience at a great price.