Softbank Acquisition Of Sprint Will Shake Up Customer Experience In The Wireless Industry

Softbank, which owns Japan's third-largest mobile carrier, just announced that it will buy a 70% stake in Sprint Nextel. What exactly will that mean for wireless customers?

First, a little background . . .

In our new book, Outside In, my co-author Kerry Bodine and I describe the customer experience turnaround that CEO Dan Hesse engineered at Sprint. By relentlessly identifying the top problems that customers called to complain about and then systematically eliminating those problems, he took the company from having the lowest customer satisfaction rating of any major US carrier to having the highest customer satisfaction rating. Fewer unhappy customers meant fewer calls to Sprint's contact centers. As a result, Hesse recently reported that Sprint saves $1.7 billion a year from averted call center contacts.

Hesse’s current challenges have centered around shareholder displeasure with the cost of licensing the iPhone and the cost of building out Sprint’s high-speed network capabilities. As I said in a previous blog post, that lack of shareholder support seems strange to me. Isn't it obvious that it's critical to offer customers the smartphone they want and a fast network with a lot of capacity to support that phone — especially in a world where they have so many choices? It should be.

In contrast to current Sprint investors, Softbank President Masayoshi Son understands that smartphones and the networks that fuel them are essential: Not only is Softbank already building a high-speed network to help it compete in the smartphone war in Japan, but also Son said that the iPhone 5 was a trigger for the Sprint deal.

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Why Some Companies Succeed — For Now — Despite Their Poor Customer Experience

Last week I got a question via email from one of Forrester’s clients, who asked:

“How do you explain the success of companies that consistently provide a poor experience but perform well financially?”

I wish more people asked this question because it shows that they’re thinking about customer experience in the right context: as a path to profits. Here’s my answer: Creating a superior customer experience is the most important thing that companies need to do. But it will never be the only important thing they need to do.

My co-author and I describe the relationship between customer experience and other factors that lead to business success in Chapter 13 of our new book, Outside In:

“Is customer experience a silver bullet that will kill off all your company's problems and make your stock price soar? No. If there is such a bullet, we haven't seen it. The fact is, regardless of your customer experience, you can still get clobbered by a big, strategic threat like a new market entrant (Netflix if you're Blockbuster) or a substitute product (digital photography if you're Polaroid). That's especially true if the new market entrant or the provider of the substitute product offers an amazing customer experience (Amazon.com if you're Borders or Barnes & Noble).”

When you have a virtual monopoly, you can get away with providing a poor customer experience right up until you can’t.

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NFL Owners Just Learned A Lesson About Bad Customer Experience. Did You?

I’m not the biggest NFL fan in the world, but now that I live in Boston, I follow the Patriots. I think it’s actually a requirement of citizenship.

And I do have a passing interest in some other teams. Who doesn’t love watching anyone named “Manning” throw a football? (Unless it’s against the Pats in the Super Bowl.)

With that as background, may I say that the now-ended lockout of NFL refs set the low watermark in football customer experience? Yeah, customer experience — not just for all those who buy tickets, but for all of us who “pay” for the games with our time by watching ads.

Lest we forget, let’s count some of the ways that the replacement refs ruined our Sunday afternoons and Monday nights:

  • Stopping the game every other play to try and figure out what really happened. Football is supposed to be a sport, guys, not a meeting of the local debate team.
  • Making game-changing calls that the replay showed were dead wrong. Hey, if you screw up, 'fess up — then make it right and move on. My sixth-grader knows that, so why doesn’t Roger Goodell?
  • Clogging the air time on ESPN with self-righteous defenses of their bad calls. (Okay, that didn’t happen on Sunday afternoons or Monday nights, but it was worse because it spread more pain across three weeks when all I wanted was to see the top 10 sports plays from the previous day. Argh!)
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You Asked, We Answered! Questions From Webinars About Our New Book, Outside In — Part 1

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.

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Hire The Will, Train The Skill

If you scroll down, you’ll see a link to part two of my appearance on Jim Blasingame’s talk show, The Small Business Advocate. Among other things, in this segment, we talked about one of the keys to customer experience success: hiring the right employees.  

Hiring is one of the tools for creating a customer-centric culture that my co-author Kerry Bodine and I describe in our new book, Outside In. Although hiring is fundamental, it’s something that many hiring managers get wrong. That’s because they’re still looking primarily at what their candidates know — their job skills — and not focusing enough attention on to who their candidates are

Here’s why that’s a problem. You can teach people how to perform tasks, whether it’s stocking shelves or doing the books. And you can teach them enough about your products and services to be able to help your customers. But if they’re people who don’t want to help customers, you’re not going to teach them to be different people.

Are there really that many people out there who just don’t want to help customers? Yes. That’s a lesson Kevin Peters, the president of Office Depot North America, learned several years ago.

Kevin asked all 22,500 store associates to take a personality assessment test designed to evaluate employees’ skills, behaviors, and aptitudes as they related to serving customers. To his surprise and disappointment, a significant percentage agreed with statements like, “If the job requires me to interface with customers, I’d rather not do the job.”

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When It Comes to Total Returns, Customer Experience Leaders Spank Customer Experience Laggards

Whenever I talk about the business impact of customer experience, there’s one thing that always grabs people’s attention. It’s an analysis done by Jon Picoult of Watermark Consulting, who took five years of data from Forrester’s Customer Experience Index and constructed two model portfolios. One is a portfolio of the top 10 publicly traded companies in the index (customer experience leaders), and one is a portfolio of the bottom 10 publicly traded companies in the index (customer experience laggards).

You can read details of how Jon conducted his analysis in our new book, Outside In, and in this post on Jon’s blog. The results are striking. Over the course of the five-year period, the customer experience leaders spanked the laggards in stock performance. The leader portfolio had a cumulative total return of +22.5%, compared with a -1.3% decline for the S&P 500 market index and a -46.3% decline for the laggard portfolio.

Five-Year Stock Performance Of Customer Experience Index (CXi) Leaders Versus Laggards Versus S&P 500 (2007 to 2011)

Customer Experience Leaders Portfolio deliver 5 year return of 22.5 percent

What follows is an interview I recently conducted with Jon to get his thoughts on why making a compelling business case for customer experience is so challenging — and so important.

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Customer Experience Disciplines Apply To Small Businesses, Too

I had fun last week speaking with talk show host Jim Blasingame, the “small business advocate.” (In fact, listening to the first segment of the show — embedded below — I was probably having a little too much fun at first.)

One reason I was keen to do the show is that I’ve been thinking a lot lately about showrooming. You’ve probably heard about showrooming — maybe you’ve done it yourself. It’s when a customer goes into a retail location to touch and feel a product and then goes online to buy the product at a lower price.

Showrooming causes a particularly acute problem for small business owners. Their very existence is at stake: Just last weekend, I walked by a small bookstore in Concord, Mass., and saw a sign in the window that said, “If you see it here, buy it here, to keep us here.”

I sympathize with that small store owner’s plight, so I’d like to offer some advice: Putting a sign in the window that begs people to buy from you is the wrong approach. Do customers want to “keep you here” because of convenience? Nope. They can get lower-priced products delivered the same day at little to no shipping cost. Do they want to add you to the list of charities they support? No, and you don’t want that either — you’re in business to make a profit, and you probably take pride in being able to do just that.

Here’s a better way to compete: Focus on delivering a superior customer experience. As a local business owner, you have the chance to know your customers better than any website can know them — even the increasingly sophisticated websites that make recommendations based on past behavior. If you develop that understanding and marry it with expertise about the products or services you offer, you’ll have a winning combination.

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Does Your Company Have A Customer Experience Strategy? No, Really

Here’s a typical conversation we have with businesspeople when trying to gauge the level of customer experience maturity at their company:

Forrester analyst: “Do you have a customer experience strategy?”

Manager: “We sure do!”

Forrester analyst: “Great! What’s in it? What’s the intended experience that it describes?”

Manager: “Well, uh, hmmm… You know, maybe we don’t have a customer experience strategy.”

The fact is, people at most companies are in the same boat as that manager (or director or VP or SVP or…). Why? For the most part, it’s because it never occurred to them that customer experience – like other business disciplines such as marketing and branding – requires a strategy to keep it on track.

Here’s why your organization needs a customer experience strategy: Without one, you’ll tend to mix and match best practices that may be great for someone but don’t align at all with the customer experience that you want to deliver.

People love those genius bars in Apple stores, right? And Apple is known for delivering a great customer experience. So why doesn’t Costco put genius bars in their stores? Simple: A genius bar provides an experience that aligns with Apple’s overall strategy of differentiating through innovation but flies in the face of Costco’s overarching strategy to be a cost leader.

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The Holy War Over Net Promoter: Is It The Ultimate Way To Measure Customer Experience?

Have you ever been caught in this crossfire?

Marketing Manager: “Net Promoter Score is the one number we need to grow!”

Customer Intelligence Manager: “Nonsense! ‘Satisfaction’ predicts customer loyalty better than ‘likelihood to recommend’ – it says so in the wonky business journals I read!”

Marketing Manager: “You don’t understand how business works!”

Customer Intelligence Manager: “You don’t understand how math works!”

The sad thing is that in a micro sense they’re both right, but in a macro sense they’re both wrong. The reason? They’re each taking an inside-out point of view based on their own specialties.

Where NPS Fits In A Customer Experience Measurement Framework

In our research into customer experience measurement, we see many organizations that use Net Promoter Score.  Some use it poorly because – like the fictional marketing manager above – they don’t understand the limitations of what NPS can do.

Here’s how they should think of it: Customer experience is how customers perceive their interactions with a company along each step of a customer journey, from discovery, to purchase and use, to getting service. NPS measures what customers say they’ll do as a result of one or more of those interactions. It’s what Forrester calls an “outcome metric.”

But outcome metrics are just one out of three types of metrics captured by effective customer experience measurement programs. The best programs gather and analyze:

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You Are In The Customer Experience Business, Whether You Know It Or Not

Customer experience is fundamental to the success of every business. For most companies, in fact, customer experience is the single greatest predictor of whether customers will return — or defect to a competitor.

Customer experience goes to the heart of everything you do: how you conduct your business, how your people behave when they interact with customers and each other, and the value you provide. You literally can’t afford to ignore it, because your customers take it personally each and every time they touch your products, your services, and your support.

In our new book, Outside In, my coauthor, Kerry Bodine, and I explore the real meaning of customer experience; prove the business benefits of delivering a great experience; and describe the six disciplines of customer experience leaders like American Express, JetBlue, Office Depot, and Vanguard. Our goal is to help readers understand why and how customer experience leads to profits — which it does, but only if you treat it as a business discipline.

Why is customer experience so important?

“Customer experience” is literally how your customers perceive their interactions with your company.

Those interactions occur at each step along a customer journey. That journey begins when people realize that you offer a product or service they might want, then compare your offer to other options. If things go your way, they’ll buy from you. Then they’ll use what they bought. If they encounter a problem, they’ll call for support.

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