Posted by Harley Manning on September 24, 2012
On September 19, my co-author Kerry Bodine and I delivered two webinars outlining the concepts in our new book, Outside In: The Power of Putting Customers at the Center of Your Business.
We received so many questions that we couldn’t answer them all during the webinars. So we split them up, and we’re answering them (in brief) in two blog posts. Here is Part 1. You can see Part 2 from Kerry here.
How many full-time employees are needed to build and maintain systematic customer experience processes?
Becoming systematic about customer experience isn’t about adding people to your company. It’s about changing the activities that the people you have today perform. Instead of proposing projects with no consideration for how those projects will affect customer experience, for example, add a mandatory customer experience impact assessment — as companies like FedEx, Fidelity, and Bank of Montreal do.
Are there benchmarks for measurement? Can you please provide some guidance for what a “good” customer experience is?
If you want to drive business benefits like increased sales and positive word of mouth, create a customer experience measurement framework and then start by benchmarking against yourself.
Measurement is one of the six disciplines of customer experience. We have an entire chapter on customer experience (CX) measurement in Outside In. A CX measurement framework ties together descriptive metrics (what happened, like length of a call to a phone agent or path through a website), perception metrics (what the customer thought happened and how she felt about it), and outcome metrics (what happened for the business as a result, like got an incremental sale). So any given company should look first and foremost at what outcomes it's trying to drive and then trace backward to see what CX drives that outcome. Establish a baseline for those, and then track them over time. The specific metrics you use within each category of measurement (descriptive, perception, outcome) is up to you — we make some suggestions in the book.
For those interested in customer experience measurement, you can also check out this blog post by my co-author, Kerry Bodine.
Is engagement beginning to overtake loyalty as a key metric, particularly given the ease of feedback opportunities through social media?
Engagement is typically a good predictor of loyalty, but loyalty is really what you need to get to in the end. By loyalty, I mean incremental purchases, customer retention (i.e., reducing churn), and acquiring new customers through positive word of mouth. If you go back to my answer to the previous question, you’ll get a sense of how loyalty and engagement can relate to each other in a CX measurement framework.
How do you balance short-term financial goals versus long-term CX goals?
Actually, improving CX is one of the best — and often the best — way to achieve both short- and long-term financial goals. To produce short-term return on investment (ROI), focus on finding and fixing the CX problems that cause customers to call your contact center. As the number of CX problems drop, the number of calls will drop, and the more you’ll save — which goes right to the bottom line. That’s what Dan Hesse did at Sprint, which now saves $1.7 billion per year due to averted calls. To produce medium- and long-term ROI, focus on the adopting the six essential disciplines of CX: CX strategy, customer understanding, design, measurement, governance, and culture. Happier customers will spend more with you, stay with you longer, and recommend you to friends and colleagues. Then you’ll see benefits similar to those enjoyed by USAA, which had one of its best years ever in 2008 when other financial services institutions were tanking.
How do you see CX teams working with existing teams that are already working on experience improvement (e.g., consumer care, online teams)?
CX teams serve as enablers by bringing expertise about tools and techniques like customer journey maps, CX ecosystem maps, ethnographic research, and co-creation to the party. If they’re centralized (i.e., they don’t report into a single channel or business unit), they’re also in a great position to broker projects that seek to improve customer journeys that cross from a touchpoint that’s owned by one part of the organization to a touchpoint that’s owned by another part of the organization. That’s how the CX team we profile in our book works at FedEx, and they’ve been very successful.
Have you noticed any unique characteristics about nonprofit CX programs?
My wife works for a nonprofit, and at Forrester, we’ve worked with a few of the biggest ones. They’re different in some ways — they have donors, not customers per se, for example. But they’re similar to for-profit organizations in that they can also use the same practices in the six disciplines — the only art is in applying those disciplines in a context-sensitive way. For example, a nonprofit can use the practices in the customer understanding discipline to ferret out the real needs, concerns, goals, and desires of its donors the same way a retailer or bank would uncover those traits in a consumer. Those needs, etc., will be very different because of the context of giving versus buying, but the techniques for finding them out are the same.
How do you measure an emotional CX?
Most CX measurement is done by survey, regardless of what you’re measuring. So what it comes down to is asking the right survey questions. In the case of measuring enjoyment, you first have to know what “enjoyment” means to a particular type of customer for a particular experience — something you first uncover through ethnographic research. For example, in Outside In, we describe how Virgin Mobile Australia discovered that to its customers, “being in control” meant having a small number of plan options that made sense to them, not having hundreds of mix and match features like a giant telecom salad bar. It found that out by getting some customers to keep online diaries through which Virgin Mobile engaged them in a dialog about (among other things) what “being out of control” felt like to them.
Once you know what your customers find enjoyable, then you can proceed to measure how much they enjoyed doing business with you. For example, if they’re bargain hunters who get a kick out of feeling like they found a great deal, you can ask them, “Do you feel like you got a good deal?”
Does your book cover B2B businesses? Is your methodology applicable for B2B? What are the main differences to pay attention to?
Outside In includes B2B case studies or examples for Boeing, CDW, Cisco, Dow Corning, Haier Group, Maersk Line, NetApp, and a whole lot more. More sophisticated B2B CX professionals already know that there are more similarities to B2C CX than differences. But they still need B2B case studies and examples to convince execs of CX value.
In terms of similarities, both B2B and B2C companies need business cases, CX ecosystem maps, and the practices in the six customer experience disciplines. And it’s important to remember that B2B customers like CIO tech buyers and purchasing managers are also consumers, so increasingly their expectations are set by Amazon, Apple, and Starbucks — not just by their work lives. Keep in mind that the founder of salesforce.com started the company with the goal of making business software as easy to use as Amazon.
In terms of differences, B2B companies typically have a smaller number of customers, with each customer making large purchase decisions — therefore each and every customer is even more important to serve well than for a typical B2C company. Also, B2B customers have customers of their own. That means that B2B CX professionals need to understand the customers of their customers in order to help their clients succeed. That’s something SAP, among others, knows well.
How do you convince top management to really take CX seriously and not just as a bumper sticker?
Score base hits by pushing through small CX improvement projects and measuring the results carefully. There’s a really good example of that in Chapter 2 of Outside In. At Fidelity, the SVP of CX introduced an innovative process improvement where, instead of asking people to submit full-blown business requests for small projects, he got a pool of money dedicated to paying for little changes. By requiring appropriately lightweight justifications for these minor requests, he was able to tackle more projects, faster. One project cost just $20,000, and it saves Fidelity $4 million a year by averting calls to customer service. It was just one of more than 160 projects that came through Fidelity‘s experience improvement system in 2011. Together those projects accounted for more than $24 million in annual savings. Those kinds of results get executive attention and support for even bigger efforts.
For companies doing business with both B2B and B2C models, how should the CX be managed? Each separately or managing them together?
Ultimately, adopting the six CX disciplines means changing the way you do business. Therefore your B2B CX will be managed by whoever manages the B2B part of your business, and B2C CX will be managed by whoever manages the B2C part of your business. In terms of how you get to that state, the centralized (and hopefully highly skilled) CX team that I talked about in my answer to question No. 5 should be able to help either part of your organization.
To drive CX transformation in a large organization, it’s important to make sure that all initiatives are aligned to deliver holistically rather than piecemeal. What organizations are successful at doing that?
Organizations that have a CX strategy are more likely to successfully align an initiative across all business units, functional areas, and channels. In Chapter 5 of Outside In, we profile examples of successfully aligned projects completed by ANA Aeroportos de Portugal, Holiday Inn, and BBVA — all had CX strategies for their initiatives. CX ecosystem maps are also extremely helpful when trying to align efforts across functional areas. Charter Communications, FedEx, and Cleveland Clinic are all good examples of organizations that do that.
What do you think of using a Net Promoter Score (NPS) to gauge customer health?
It depends on how you use it. In the book, we profile JetBlue’s CX measurement program, which incorporates Net Promoter Score as one of the things it measures. If you’re seriously interested in this topic, I’d recommend reading a blog post I wrote recently titled, "The Holy War Over Net Promoter: Is It The Ultimate Way To Measure Customer Experience?"
Do the concepts in the book correlate with Net Promote Scores or the Customer Experience Index? If so, how?
Regarding Net Promoter Score, please see my answer to the previous question.
The Customer Experience Index (CXi) is a perception metric — it measures the customers' perception of how well an experience met their needs, was easy, and was enjoyable. Not coincidentally, those are the three levels of the CX pyramid: meets needs, easy, enjoyable. Therefore the CXi correlates strongly with everything in the book. Rather than go into a longer explanation on the topic of CXi, I’m going to refer you to a blog post by Megan Burns, "Frequently Asked Questions About Forrester's Customer Experience Index, 2012."
Is it possible to see the companies being tracked in the CXi?
The complete list of results for the CXi are only available to Forrester clients and can be found in this report, "The Customer Experience Index, 2012."
However, nonclients can get an overview in this blog post by Megan Burns, and in some of her other posts, you can get more insight into companies that exceeded at meeting needs, being easy to do business with, and being enjoyable to do business with.
If you’re interested in watching the recorded webinar and joining the conversation, you can visit forrester.com/outsidein-webinar and then come back to post your questions here.
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