How The “Most Improved” Companies Raised Their Customer Experience Game Last Year

Every year in January, Forrester publishes its Customer Experience Index (CxPi), which reports how customers rate their interactions with major companies. We learn a lot from studying leaders in various industries — like USAA, which was the top credit card provider, top bank, and top insurance provider this year.

Last week, we published a follow-up report, which examined companies that raised their CxPi scores by at least five points year over year. Among others, these brands included Aetna (up six points), Citi’s credit card business (up 12 points), Charter Communications (up 20 points as an ISP and up seven points as a TV service provider), and Office Depot (up nine points). Our goal was to discover what, if anything, these firms did to earn their improvements.  

And as it turned out, their big gains came as a result of major efforts.

Our research uncovered customer experience initiatives that fell into two buckets. The first bucket was business process re-engineering. Efforts here included creating or enhancing voice of the customer programs, measuring customer experience consistently across the enterprise, and changing incentive programs to reward customer-centric behavior by employees.  

But perhaps the biggest impact came from upgrading the customer experience governance process at the enterprise level. For example, Aetna transformed its decentralized part-time customer experience task force into a full-time enterprise customer experience team. Cox Communications made an even more drastic change, consolidating any function with material customer interactions into one group led by a new senior vice president of customer operations.

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Customer Experience Outlook For 2011: Lopsided Battle For Differentiation

We recently published the results of our annual survey of the members of our customer experience professionals peer research group. The group is interesting in that they’re pros: They all work to improve the customer experience delivered by their organizations.

This year, their responses are encouraging — but also very sobering.

Here are some of the encouraging data points. A whopping 86% said that customer experience is a top strategic priority at their company. More than half work at companies that already have a single set of customer experience metrics in place across the entire company, and another 20% said that their firms are considering this move. What’s more, almost as many respondents said that their companies have a voice of the customer program in place, and another 29% said that their firms are actively considering a voice of the customer (VoC) program.

At this point I’m thinking, “Fantastic! Their companies care about customer experience, and they are implementing mission-critical programs that will help them succeed!”

Plus they’re coming from a good place. When we asked our panelists how they’d describe their executive team’s goal for customer experience, 63% of respondents said that their senior executives want to be the best in their industry, while another 13% said that their execs shoot higher and want to be seen as a customer experience leader across all industries.

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Hot Off The Press: Forrester’s Customer Experience Index, 2011

How should you measure customer experience? Is it even possible to measure something that feels as squishy as customer experience?

As it turns out, you can measure it, you should measure it, and you even have some decent options for measuring it. Your alternatives range from monitoring the real-world interactions your customers have with your firm (like clicks on a site or the length of a call) to asking your customers for their perceptions of those interactions (the real customer experience) to tracking what your customers do as a result of the experience (like making another purchase or recommending you).

At Forrester, we have our own direct measure of customer experience that we’ve been using since 2007: the Customer Experience Index (CxPi). Today we published the results for 2011, which are based on research conducted at the end of 2010.

To help understand those results, let me explain how the CxPi works. We ask more than 7,000 consumers to identify companies they do business with in 13 different industries. We then ask respondents to tell us how well each firm met their needs, how easy the firm was to work with, and how enjoyable it was to work with (questions that correspond to the three levels of the classic customer experience pyramid). Then for all three questions, we calculate each firm’s CxPi score by subtracting the percentage of its customers who reported a bad experience from the percentage who reported a good experience. The overall CxPi is an average of those three results.

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Customer Experience Improvements Can Be Worth Billions — Yeah, “Billions” With A “B”

Forrester just published Megan Burns’ new report that models the business impact of an improved customer experience. I’m proud of this report because it:

  • Quantifies the correlation between a rise in a company’s Customer Experience Index score and the corresponding increase in three loyalty metrics that every company cares about: purchase intent, likelihood to switch business to a competitor, and likelihood to recommend.
  • Makes conservative but realistic assumptions about the business fundamentals of companies in 13 different industries.
  • Produces eyepopping projections of increased annual revenue as a result of realistically attainable improvements in customer experience — by industry.
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Customer Experience Defined

If you’re reading this post, you’re someone who cares about customer experience. You might even be one of the professionals who works in the field of customer experience full-time.

So I’m going to go out on a limb here and guess that you occasionally get the question, “What is ‘customer experience?’”

Now maybe when you’re asked that question, it isn’t phrased so directly (or politely). For example, I get asked, “Isn’t customer experience just marketing?” And, “How is customer experience different from customer service?” But the bottom line is that people are looking for a definition that’s crisp, useful, and distinct from the definitions of other things that companies do. They are right and reasonable to ask for this — but collectively those of us who work to improve customer experience have failed to answer them.

I mean no offense to the many people out there who have tried to define “customer experience.” I’ve read many of the attempts that are out there, and the ones I’ve seen tend to be longer and more convoluted than necessary.

Not that customer experience is an easy concept to define. The customer experience team at Forrester has been debating the definition of customer experience for a while now, and it took us until recently to reach consensus. We now define customer experience as:

“How customers perceive their interactions with your company.”

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iPhone Versus Droid: A Personal Perspective

I’ve been meaning to write about this topic for a while. What got me past the tipping point was receiving yet another in the series of hilarious videos in the iPhone versus Evo wars. (I love those, no matter which side they come down on.)

Let me first disclaim that I do not cover mobile devices for Forrester so I am speaking strictly as an end user. Okay, I have disclaimed! Now for the story . . .

Way back in the spring, I was visiting my sister and brother-in-law in Ohio. My sister had recently gotten herself a Droid and was not very happy with it. She let me play with it for a while, and I have to say that I did not like its weight, the sharp corners, and the little vibratory “thunk” of physical feedback that probably seemed like a good idea to the designers but came off as annoying after about the third time it happened. The GUI was okay but didn’t strike me as an improvement over my iPhone — in fact, I thought it was a little worse.

My sister had come to similar conclusions. She had purchased the phone so she could stay with Verizon as her wireless service provider. Her biggest complaint, though, was the lack of a decent app store. And when I say “decent,” I mean that literally. When she called up her app store, she got a really bad interface that didn’t help her find relevant apps without a struggle. Worse, about every third listing was a porno app. (I guess that’s what happens when you don’t curate content.)

Anyway, she regretted her choice but felt locked in by her contract.

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Ease Of Use Is Now “A Federal Case” For Mortgage Paperwork

When I was kid, when we thought someone was overreacting, we used to say “don’t make a Federal case out of it!” Maybe people still say this, but I haven’t heard it in a while. I suspect that it went into the Museum of Way-Historical Sayings. Still, I’m sure you get the idea: If the Federal Government is involved, it’s a big deal.

I thought of this expression this morning when I read an article in The Wall Street Journal. There is quite a battle going on over an attempt to make mortgage-disclosure documents easier to understand. On the one side, we find our Federal Government in the persons of Elizabeth Warren and Treasury Secretary Timothy Geithner. On the other side, you find the mortgage industry (or at least a big chunk of it — the article could have offered some more details IMHO).

Now if you’ve ever taken out a mortgage, you know that the documentation you received was close to the polar opposite of “easy to understand.” You may have thought (as I did) that the difficulty stemmed from a failed attempt by lawyers and bankers to communicate effectively. But apparently not! (Or at least that’s not the only reason — I’m pretty sure that most lawyers don’t have John Grisham potential).

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Live Streaming From Forrester Customer Experience Forum 2010 — Day Two

It’s Day 2 of Forrester’s Customer Experience Forum 2010, and I'm incredibly excited to see this morning’s opening speech by our own James McQuivey. He's going to demo Microsoft’s new interface that uses gestures and natural language commands with help from the company that built it, PrimeSense. You may have heard of this as Project Natal or Kinect — but hearing about it does not do the trick. You have to see it and then hear James’ take on what it means for e-tailers, financial planners, media companies . . . wow. Forgive me if I seem a little blown away, but I’ve been watching the rehearsals, and all I can say is that I have to have one of these! Check back throughout the day for more about this speech and others.

Today's Live Stream

8:30-8:35 a.m.
Day 2 Opening Remarks
Harley Manning
, Vice President, Research Director, Forrester

8:35-8:45 a.m.
What Our Ethnographic Research Tells Us About . . . You!

Victoria Bough
, Vice President, Practice Leader — Customer Experience & Customer Intelligence, Forrester

8:45-9:30 a.m.
How Radical New Interfaces Will Transform Consumer Product Experiences

James McQuivey, Ph.D.
, Vice President, Principal Analyst, Forrester

Sponsored by RightNow

Live Streaming From Forrester Customer Experience Forum 2010 — Day One

Welcome to all of you at Forrester’s second annual Customer Experience Forum in New York City! And to all of you who can’t be here — we’ll miss you. Sales for the event were so far beyond our goals and expectations that we are flat out amazed. There are about 900 people here from many industries, especially financial services. Attendees come from many professional roles: We’re seeing a good mix of people who work in marketing, eBusiness, customer intelligence, and customer experience (of course), including a strong contingent of senior managers and executives. So please keep checking in here for the latest updates and discussions around our theme of customer experience breakthroughs!

Today's Live Stream

8:30-8:50 a.m.
Welcome And Setting The Stage 
Harley Manning
, Vice President, Research Director, Forrester

8:50-9:35 a.m.
Engage Online Customers With Emotional Experience Design

Ron Rogowski
, Principal Analyst, Forrester

Sponsored by Rightnow

Entries For Forrester's Voice Of The Customer Awards 2010 — Wow!

We just finished judging the entries for Forrester's Voice of the Customer Awards 2010. Announcing the winners will have to wait until we’re onstage at the Customer Experience Forum in New York on June 29. But there is something I want to announce right now: I am really impressed by the entries! :-)

Because I was also a judge last year, I couldn’t help but notice some big changes from last year. Here they are in no particular order:

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