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Posted by Paul Hagen on May 3, 2013
A chemical manufacturer with a solid customer listening program noticed an uptick in complaints about pricing. Unlike many firms, which would take the comments at face value and take action accordingly, this company first stepped back and reflected on its strategy: it sold premium chemical for advanced applications targeted at particular industries, so it surmised that the company shouldn’t see this kind of feedback. It did some root cause analysis, talking to those customers. It learned that some distributors were selling chemicals for applications in markets better served by off-the-shelf, commodity products. As a result, not only were these distributors driving detractors, which were creating a headwind for selling into their target market, but they were wasting time on low-value sales and more importantly, using valuable resources internally that made the company competitive in target markets (e.g. scientists to help innovative clients discover new applications for the chemicals). The company decided that the right course of action was to re-visit its distributor training and communications programs to better ensure sales teams understood the core value proposition and how to find the high value opportunities.
There are at least a few lessons to take away from this story.
Know your customer experience strategy. Firms often have blanket statements such as “we aim to delight our customers.” When these lack a connection to a company strategy, which should clearly articulate value propositions for specific target markets, firms can spend a lot of time and energy jumping through hoops trying to serve customers it never should have acquired in the first place. A situation that the chemical manufacturer avoided by reflecting on its strategy to direct its activities.
Think of customer experience efforts as a continuous improvement effort, not a metric to achieve. Customer listening programs shouldn’t be a goal unto itself to help a firm benchmark against competition or achieve some score. Rather, it’s a set of signals that can either point to areas of dysfunction or of excellence in the ecosystem that delivers the experiences that customers have. Firms that excel at customer experience make a discipline out of digging deeper around these signals to understand the root cause (wherever it exists) and create a governance mechanism to drive actions across the company. In the case of dysfunction, the signals can point to poor processes, miscommunications, misguided policies, or in this case selling to the wrong kinds of customers. In the case of excellence, the signals represent opportunities to replicate activities that drive value – sometimes done by employees who don’t even realize what they’re doing is exceptional because they do it naturally or that the company doesn’t realize is important to customers.
Adjust regularly to customer signals…tactically and strategically. Customer listening programs should serve as an early warning system of changing customer needs or market conditions. American Express regularly adapts hiring criteria and training as the nature of customer calls evolves (e.g. from billing questions to queries such as how a customer can get the same mobile offer that a friend received). It does this by looking at the characteristics of recent top performing employees – something that changes as customers’ needs change.
Changes in these customer signals should also trigger companies to adapt its strategy. Global outsourcing, cloud based computing, digital distribution channels among other factors are radically changing competitive landscapes. Firms that make a discipline out of listening to these customer signals and identifying strategic areas of opportunity -- or recognizing changes in expectations from its target customer base -- protect themselves from being sideswiped after it’s too late. The CMO of Sysco (the $40+ billion food distribution company), Bill Goetz, described this essentially as giving the customer a voice as the company develops its strategies rather than doing it in the vacuum of the board room.
Orchestrate change and innovation across the ecosystem. As the chemical manufacturer learned above, customer signals are not just about the actions that happen internally that can create detractors, it’s about sharing those signals and changing behavior across the ecosystem, including its partners. Sharing this information and working with 3rd party partners – from distribution partners to outsourced business process providers – help firms create shared value for themselves, customers and their partners. But, that requires collecting, analyzing, sharing and creating mechanisms to act on those customer signals.
I'll be speaking more about how companies transform around customer experience, including re-thinking their business architecture, at Forrester's Customer Experience Forum East, June 25-26 in NYC. Hope to see you there.
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