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A Leadership Perspectives
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Building Best-in-class Customer Experience
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Executive Summary
If good customer experience makes for good business sense, then business
programmes that strive to deliver really memorable positive customer experiences
promise to take organisations into high-performing and/or high-profit market niches.
What can business leaders do to drive their organisations into these winning positions?
Produced by du marketing in association with Ovum, a preferred knowledge partner
Business case overview
Customer retention rates are one of the most
important key performance indicators of business
success. So often the level of customer loyalty
(and repeat business) is shaped by the quality
and consistency of the customer experience. Yet
fewer than 20% of executives currently believe
their companies are best-in-sector in customer
experience. As many as 60% of them hope to
take their organisations to positions where they are
considered best in their industry within 3
years, however.
The reason is that the quality of the customer
experience is a huge driver of retention and financial
success. Behind it, is everything that relates to
a customer’s perception of an organisation or
business, its products or services, its staff, its brand
and its commercial or market proposition.
Every customer touch-point is an opportunity for
the organisation to improve customer perception, to
improve the customer relationship, and to improve
retention by securing customer loyalty. In business,
20% of the customer base generates 80% of the
profits and loyal customers also offer the CFO the
best prospect for growth as they are soft candidates
for up-selling or cross-selling opportunities for new
products and services. Customers of businesses
considered to deliver better than the industry norm
in customer experience (and in the top quartile) have
been found to be 6% more likely to make additional
purchases than their industry sector average.
Understanding the value of focus:
Customer Experience measures
With market globalisation levelling the playing field
of commerce, customer experience will increasingly
shape an organisation’s competitive position.
While important, being able to compete on product
functionality or price is no longer enough.
commissioned 12 focus groups, and conducted as
many as 2,400 detailed interviews with its customers
in search of clues. These issues are worth exploring
at the start of a customer experience performance
improvement initiative:
It is a trend that was discernible back in 2003, when
consultancy Beyond Philosophy found that 71%
of business leaders viewed customer experience
as the next competitive battleground. Today
95% of business leaders believe that it is in the
arena of customer experience where commercial
organisations will increasingly compete in the future,
and where they have to look for market advantage.
• C onsider the speed of the customer interaction.
Currently, companies are generally poor at
understanding and measuring the state of customer
experience within their organisation. Those that do
measure it understand that while they can work to
improve customer interactions in isolated areas,
they will not develop positions that give competitive
advantage until their focus on customer experience
has become embedded into their operating fabric.
To gain a greater understanding of the challenges
organisations face, one global services group
•C
onsider the context of the customer interaction,
and the motivations behind the engagement.
•C
onsider aspects of trust, confidentiality and
security of the information that is provided by
the customer, especially when an engagement
involves the exchange of any data that is personal
or sensitive in nature.
•C
onsider the price of ‘value’: setting a low price for
a product or service should not equate with setting
low expectations in the context of the customer
experience.
•C
onsider the ease or simplicity with which a
customer can engage with the organisation.
This can often be the most important quality of a
customer interaction.
Produced by du marketing in association with Ovum, a preferred knowledge partner
Planning top-line growth through
best-in-class customer experience
Before starting out with any customer experience performance improvement plan, there are three
guiding principles that will help the leadership team shape an effective change programme road map.
1. Directive number one – define and communicate the goal.
• Agree on and communicate internally a clearly defined set of target customers.
• Agree on the strategic plan and communicate all the way across the organisation in clear and easily
understandable terms exactly what is the nature of the customer experience the organisation is striving to
deliver. So often, customer interactions with different parts of an organisation lead to a different customer
experience.
• It is vital that everyone is on-message. It is imperative that front-line sales to employees in customer service,
product development and marketing, to the CFO’s back-office finance group, HR and IT groups all have the
same understanding of what customer experience they are delivering.
2. Do not expect overnight success.
• These programmes can call for anything from major cultural and organisational change, to some minor
refinement or modification of a specific business process.
• Either way, the perfect customer experience is not created in an instant. Like any business change
programme, it will involve changes to people, processes and technology and this will clearly take time.
• Experts in the field advise scrutiny of operations from many dimensions, to consider the customer
expectations around brand, channels to market, pre-sales and support, business processes, recruitment
policy, quality of communication, etc.
3. Measure the right metric.
•C
ustomer service levels, or customer satisfaction measures are not always the best indicators of customer
experience.
•E
xperts in this arena urge that net promoter scores be adopted as the minimum preferred measure of
customer experience and incorporated by the executive as a business KPI.
• There is a need to understand what drives the customer experience, and look at ways of developing views of the
‘customer signature’ to measure the level of emotional engagement that a customer has with the organisation.
As well as these, some progressive organisations will
actively look for other sets of valuable customer inputs and
operate ‘Voice of The Customer’ or ‘Customer Advisory
Board’ programmes, which help link customer insights and
customer experience measures into the operational process.
These are strategic continuous improvement programmes
which allow the executive team drive high-impact change
initiatives. These incrementally enhance the customer
experience, by helping fine-tune operations or new product/
service development plans, to take advantage of feedback
and other customer insights.
Du is one company in the region that is pioneering such
initiatives. It has launched a series of leadership and
customer programmes, with the aim of driving end-to-end
customer experience enhancements which would be valued
by its target customer segments. Its programme draws on
some of the customer experience principles developed by
Produced by du marketing in association with Ovum, a preferred knowledge partner
Beyond Philosophy, and which emphasises the need for:
• A clear set of customer service values.
• Well aligned operations, business processes and
employees.
• Compelling brand values.
• End-to-end customer connections.
One outcome of such a focus is a better understanding
of what really makes customers tick. By evoking certain
customer experiences and eliminating others, value can
be created. More than 50% of what makes up a customer
experience comprises aspects about how a customer
feels. Does the experience leave them feeling fulfilled
or frustrated? Inspired or hopeless? Satisfied or underwhelmed? Valued or exploited?
Experts have found there are as many as 20 different customer
emotions which can play out during customer interactions.
Customers carry a so-called emotional signature, depending
on how these play out. Each is linked to a positive or negative
outcome and which connects directly or indirectly to revenue or
cost. So it is vital business understands just what emotions it is
trying to evoke with its customers, and whether those emotions
are deliberate or whether they are consequential.
There are said to be four separate states a company must
pass through in its approaches to customer experience,
taking it from naïve to natural. From being reactive to
customer demands, to focusing primarily on the physical
aspects of the customer experience, to where it orchestrates
emotionally engaging customer experiences, and finally when
the organisational focus on the customer is total and it uses
specific senses to evoke planned emotions.
Customer experience:
greater than the sum of all of the parts
When dealing with something as complex as
customer experience and emotionally-driven
consumer behaviours, it is next to impossible to
understand the components behind those behaviours
in isolation. Moreover, the whole experience needs to
be considered against customer need.
alluringly simple. Take the percentage of customers
who are highly likely to recommend others to become
a customer (promoters), subtract those who are
disinclined, indifferent, or only somewhat likely to
make a recommendation to others (detractors):
P (%) – D (%) = Net Performance Score (%)
In the retail, hospitality and travel industries, the
use of the mystery shopper is considered a highly
valuable tool. It is a means of appraising the customer
experience holistically, and within a framework that
provides useful metrics against which the experience
can be judged. These and many other sectors have
also adopted the use of customer satisfaction scores,
although this method is deemed poor at measuring
experience against customer need. A major survey
by a leading business performance improvement
consultancy of 350 retail outlets across automotive,
banking, mobile phone stores, and fast food and
coffee shops in five Gulf states, revealed that retailers
make a good first impression. Customers are happy
with their clean stores, quick and polite service and
short queues. However, customer expectations were
found to be low. Mediocre service was scored as
more than satisfactory simply because consumers
had become resigned to low service levels and
poorly trained staff. A preferred metric, increasingly
recommended by expert practitioners and analysts, is
the customer advocacy or net promoter score (NPS).
NPS can predict whether overall customer loyalty
will encourage a business to grow or not. The idea is
A higher score leads to better top-line growth. Since
the research behind NPS was first presented by
Fred Reichheld in a 2003 Harvard Business Review
article, it has been adopted as the ‘platinum standard’
in customer satisfaction metrics. NPS involves much
more than simply measuring scores, however. It
is really much more about what an organization
does in order to act on its customer feedback,
making workflow and systems refinements to drive
business performance. eBay, which has as many
as 100 million buyer and seller customers and more
than 16 million average daily listings, uses NPS
to understand how to better handle the significant
number of customer support requests it receives
each day. The online auction house combines
contact-volume and transactional-NPS information
to target areas for improvement. The areas are then
addressed by cross-functional ‘agile teams,’ charged
with improving the handling of issues in the customer
support organisation. More importantly, the teams
work to prevent issues from occurring upstream,
following-up with members to foolproof processes
and bridge any gaps between customer service and
the product, policy, and process sides of its business.
Produced by du marketing in association with Ovum, a preferred knowledge partner
Technology support for customer experience
Many businesses have by now already deployed customer
relationship management systems. However, these record
customer interactions as transactions, rather than tracking
the complex relationships that exist between an enterprise
and its customers. The increasing role and importance of
online and social media-based customer interactions only
further complicates this issue. These more nuanced customer
interactions are not suitable for the transactional model.
Newer technologies have emerged that do help organisations
capture customer experience data at critical touch points such
as point-of-purchase, during service delivery, and into aftersales support. These collection techniques are also flexible
enough to optimise customer interactions over the web, by
email, IVR, SMS and telephone.
Other software types integrate this customer experience
data into a data warehouse of customer experience
intelligence that can mined by business analysts. The
applications are useful in the sales office, as they allow
reporting by customer segments, region, by call centre,
product line, sale agent, account, and so on. Use of
this type of analytics and business intelligence software
not only helps reduce customer churn and retention,
but supports core business activities within customer
management such as customer acquisition, customer upsell and cross-sell, customer lifetime value measurement
and campaign management analysis.
Going forward, analysts say that it will be the mobile
experience that is likely to be the next customer experience
frontier, with high-performers successfully engaging with
the customer in the first few seconds of an interaction,
and optimising the experience to ensure a consistent
experience across this untapped channel. The coffee house
chain of Starbucks is being held up as an example of an
early adopter, having piloted social-media marketing and
sales promotions, and introduced a scheme that allows
loyalty card holders to pay in-store by their mobile phone.
Its approach to mobile is one of the elements believed to
have helped drive its recent quarter-on-quarter same-store
revenue increases.
Customer experience-oriented,
business as usual
Market watchers and economists maintain that experienceoriented businesses which focus on choreographing memorable
events and interactions for their customers represent the
next stage in economic evolution, following earlier periods of
agrarian, industrial and service-oriented economies.
The notion of the ‘Experience Economy’ has been
proposed and an era of mass customisation, as
popularised by the ‘Long Tail of the Internet Economy,’
where companies offer a customer experience which
can become increasingly ‘personalised.’ Again,
Starbucks is said to be a prime example of this new
generation of consumer-focused, experience-oriented
business. The different prices the market is able to
support for a handful of coffee beans compared with
a jar of instant coffee versus a Starbuck’s coffee, is
evidence of the value customers place on increasingly
refined customer experiences.
Active participation
EDUCATIONAL
ESCAPIST
Absorption
Immersion
ENTERTAINMENT
ESTHETIC
Passive participation
Produced by du marketing in association with Ovum, a preferred knowledge partner
Charting the landscape of the
Experience Economy
In proposing the Experience Economy, Joseph Pine and James Gilmore outlined that four types of experiences
will drive this new economy. The advice when designing and delivering a customer experience improvement
programme, is that there is a need to consider how to theme the experience; how to harmonise the experience
with positive cues and eliminate negative cues; how to mix in memorable events; and how to engage all of the
five senses.
It is important to accept that different customers will be looking for different experiences -even when the base
product or service they are receiving is the same. Getting it right for each customer segment leads to excellent
customer experience and business success. A poor customer experience - or offering a customer the wrong
experience - will mean lost revenue. u
Conclusions: A mandate for customer
experience excellence
Consider what customer experience best suits each target customer segment. Deliver the experience
consistently, but appreciate the nuances of place and speed of the customer engagement, their chosen
channel of interaction, the strength of the business relationship with the customer, and the customer’s
emotional signature.
Agenda item 1 – Embed customer loyalty and net promoter metrics into executive KPIs.
Agenda item 2 – Explore customer touch-point analysis and customer experience business flows.
Agenda item 3 – Look for specialist service provider expertise to smooth and/or enrich the customer
experience journey across the quad-play business channels of web, call centre, mobile and interactive TV.
This is the first in a regular series of Leadership Perspectives White Papers, produced by du marketing
in association with Ovum, a preferred knowledge partner
For more information, please email [email protected] or visit www.du.ae.
We’d like to thank Colin Shaw of Beyond Philosphy, who contributed to some of the themes explored in
this Leadership PerspectivesWhite Paper.