Posts Tagged ‘Smart Organisations’

Gone Fishing for Customer Experience Benchmarking? Or Salmon Fishing in the Yemen?

September 25, 2012

A Guide to Customer Experience Benchmarking

You’re preparing for the next Board session on “Customer”. Your CEO wants more context. Competition? Best-in-class? What is it these people are doing? Where do we need to focus? How can we do better? It’s a key moment. You need some benchmarks and quick but what type and how? The wrong type and you’re sunk. The right type and you’ll have everyone on-board and sailing off into the Horizon on the Good Ship Customer.

In the film, Salmon Fishing in the Yemen, a fisheries expert is approached by a consultant to help realize a sheik’s vision of bringing the sport of fly-fishing to the desert and embarks on an upstream journey of faith and fish to prove the impossible possible. Its quite a lot like the journey a CX professional goes on to convince an organization to invest in Customer Experience.

Done right, benchmarking can create a compelling need for change, stretch thinking and help everyone to understand where and how to improve.

Done wrong and the critics will be proved right. “It’s not relevant to us, it stiffles creativity and innovation. Or its only skin deep. Sure it tells us we’ve got a problem but not what we need to do.”

So as you go fishing for customer experience benchmarks, the first thing you’ve got to be aware of are there are three specific types of benchmark that help you answer very different questions. In reality you’ll need all three to answer the CEO’s exam question in full.

  1. How well are you fishing?
    Normally answered in the context of the competitive set and best-in-class. Strategic outcome measures of both Customer Perception and Customer Financial Performance are used to determine the answer. Normally plugging into one of three industry wide measurement standards or extending your own surveys to non-customers will provide this answer.
  2. Selling you fish – where are there more fish?
    Getting into the delivery specifics of touchpoints & channels.  Here you are answering the questions: Is it our specification (service standards), is it the sophistication of delivery (bells and whistles) or the effectiveness of delivery (how well you do it)?
  3. Teaching you to fish – how can we improve our fishing?
    Improving your organisational fishing technique requires reviewing and  comparing management practises at a deep level. Are the best companies using different approaches? If so are they relevant to us and can we adopt them. Normally applied at the four stages of understanding, designing, delivering and managing the customer experience. See Smart Organisation CE Model.

You can think of these three questions as the What, Where and How of benchmarking. An alternative way of viewing these is the 3 P’s – Performance, Practice and Process. The Table below gives an overview of the different benchmark types and the pro’s and con’s of each type.

What, Where and How of CE Benchmarks

WHAT

There are main standards in strategic perception measures that can be benchmarked. All three types claim a direct link with business performance. Organisations normally have their own customer metrics and can tie into the industry wide standards to benchmark performance.

Customer Satisfaction – Satisfaction generally has a low correlation with behaviour. However, the American Customer Satisfaction Index has shown a causal relationship with GDP Growth. The latest report showed Amazon has just regained its top spot from NetFlix with a score of 87%.

Experience Studies – Other studies that look at consumer perception of experience (functional emotional and accessibility).  Sam’s Club and Publix earned the top two spots in the 2012 Temkin Experience Rankings. Forrester’s study of 7,700 US consumers using their CxPi methodology shows retailers and hotels score highest.

Net Promoter Score – The “One number” that takes detractors away from promoters made famous by Reicheld that has claimed a direct correlation to growth in every sector. Though I know many clients that have struggled in practice, there is no doubt that its simplicity can be compelling. The European Studies show Apple leading the way.

Commitment – The concept developed by Jan Hofmeyer explains how deeply committed customers are to brands and how suseptible to conversion. It too has a high correlation to consumer behaviour and results.

WHERE

This is generally more difficult to benchmark as the information is less widely available.

Standards – A key question if you’re not doing very well, is whether its your promise that isn’t up to scratch or the delivery. Desk research will reveal what service standards are prevalent in the market place. Understanding delivery against these standards required deeper competitive research (see delivery below)

Touchpoint Sophistication – At HOWTOEXPERIENCE, we use best practice maturity models to look at the sophistication of treatment by or across touchpoints. Organisations like Shopworks will conduct bespoke benchmarking of retail experiences, with broader retail studies available from ICE. The CXM Maturity Model developed by Henley Mgt Centre, Cranfield and Chordiant is a capability based model that looks at the degree to which real time, multi-channel, data-driven marketing is seamlessly in place.

Delivery – Mystery Shopping and Touchpoint specific satisfaction comparisons is a common way to achieve this and compare against competitors. Many providers will provide multi-channel “Voice of the Customer” solutions here, including Carpeo. Omnibus studies can also be useful, one example is Global Reviews.

HOW

Leading organisations know that asking themselves the tough questions of why and how, is essential to improve.

A number of survey-based studies are available. These ask respondents to self-score on importance. Recent studies by CIM show 69% of CMO’s believe that investing in Customer Experience is the best way to build their brand but only 31% believe their leaders understand what that means and only 22% of staff understand their role in delivering this. Other studies show that the biggest gaps in how Organisations are approaching CE is in CE strategy, having a disciplined approach, and articulating the business case.  These give useful guides to priorities but don’t get deep into the reality of an organisations own practices and what needs to be done.

The HOWTOEXPERIENCE model is a disciplined approach to CEM that gets right into the specifics. Derived from the best practices we’ve observed over the last 10 years, you can benchmark yourself against the very best and a broad spectrum of others. It builds in the 16 CEM disciplines that Smart Organisations exhibit and helps people answer the key questions:

What do the best do? How do I compare? Where are my priorities? What do I need to work on specifically?

Just like the film, whether its fishing or Customer experience, if you use the rights tools and find the right expert to help, you’ll be amazed at the hurdles that can be overcome and the amazing visions realised.

For more information on Customer Experience Benchmarking please click here… or contact us on: info@h2x.biz.

CE Benchmarking Pro’s and Con’s

About HOWTOEXPERIENCE: We consult to the world’s leading organisations on customer experience. We have a toolkit of licensable methodologies to help practitioners make real progress quickly.

About the Author: David Williams has been working across the globe with big blue-chips and innovative start-ups on customer-based transformations for the last 15 years. He’s helped many customer practitioners and executive teams shape and realise their customer and business goals. A key note speaker and regular publisher of articles, including chapters on customer experience within the IDM Guide.

Show me the Money: Jerry Maguire on how to build Customer Experience Business Cases

September 24, 2012

Getting Financial Benefits from your customer experience efforts is essential in today’s economy for both personal and corporate survival. CEO’s and CFO’s want you to “Show me the Money”. Just like the film Jerry Macguire.

One client discovered 7 relatively easy steps to increase profitability by 50%

Click here to see Jerry Maguire in action

Earlier in the year, I was fortunate enough to facilitate the Financial Benefits Workstream of the annual ECEW conference, one of the best Customer Experience Conferences you can attend. This article summarises the main discussions.

Create Value WITH customers

Its easy to take Value FROM customers and hope they don’t notice. Increase prices, reduce pack size, dilute the product, reduce the service. But with consumers increasing getting smarter than organisations (see recent blog) that’s a risk. Head the lessons from Verizon and Bank of America’s fee increases of last year and the associated consumer backlash. At ECEW Dave Carroll’s “United Break Guitars” was a powerful reminder of individual consumer power and brand damage that can result. So, create value WITH Customers, remove the things they don’t value, give them more of the things they do. Eliminate cost to serve by getting it right first time, was one of the recommendations from Richard Watmough of BSI.

Often the WITH or FROM tension isn’t explicit but it is deeply entrenched, especially when the P&L’s under pressure.

Don’t change beliefs, appeal to desires

It’s an old advertising mantra that Google knows well. Google could have tried to convince everyone in the advertising industry that TV advertising doesn’t work and that online advertising is more effective, but they didn’t. They simply said, we’ve got some potential customers here – would you like them? And the same approach is required for Customer Experience Benefits.

A solid business benefits case created with and signed off by finance is the Customer Experience Professionals best friend. Don’t try to convince everyone that Customer Experience is a philosophy that will revolutionise the company, just show a compelling business benefits case. That’s what all businesses desire. So how do you go about it?

There are four steps to achieve this.

  1. Understanding what Customers Value
  2. Understanding Customer Value
  3. Touchpoint Opportunities
  4. Business Case model

Understanding what customers value

This starts with classic needs research and understanding the relative importance of the various elements of the proposition. Developing impact curves for levels of service delivery through conjoint research is really important. I remember a discussion with one organisation who had made huge efforts (and invested a lot of money) to move speed of telephone answer from average of 60s to 50s but with no impact on customer.  It’s vital to understand how important individual components are and at what level the customer begins to notice. Using simple pair-wise research can also determine the role the component plays in the experience.

GGRS – Understanding Customer Value

There are four drivers of customer value: Gain, Grow, Retain, Serve. If you think about it, you’ll soon realise that these are the only four ways you can make (or lose money) with customers. Unless you understand these drivers across the customer base you won’t be able to systematically enhance customer value.

Isolating the costs and value associated with these activities across the customer base is always revealing. Allied with a review of touchpoints and sales, service and marketing approaches always leads to opportunities. In a recent client, we were able to show how a 50% increase in profitability could be achieved in a year through seven relatively straightforward steps. That got the Board’s attention!

At ECEW, Peter Sinden from leading Insurer LV= presented on how he and team had focused on the “Serve” component. One question he asked himself and the audience was what‘s the true cost of hiring and training each new staff member. (Ans: significantly more than the recruitment fee!). He showed that by focusing on employee attrition he had both saved significant amounts of money but also improved service levels significantly. Investing part of the savings made, enabled him to start to create a virtuous circle of improvement. At LV=, they have truly proved the employee-service-profit chain.

Touchpoint Opportunities

Mapping touchpoints, understanding volumetrics, costs, value and error rates and their effect on the GGRS drivers enables value opportunities to be determined. One of our client’s, Gayle Terry of British Gas, talked about how British Gas used these techniques for their connected home products, including the revolutionary Remote Heating Control (as seen in recent adverts). This, combined with customer research, helped prioritise experience investments.  Specifying consistent cost effective delivery, whilst investing in a number of ground-breaking experiences. It’s a key proof point in British Gas’ brand re-positioning.

Business Case Model

At HOWTOEXPERIENCE, what we do is model the fixed and variable costs in the P&L and apply the customer value dynamics. By that we mean the GGRS dynamics by type and value customer. We then model these dynamics  over 3-5 years to baseline the as-is situation. You can then run various improvement tactics through the same model to see relative effects. It’s simpler than it sounds and can be completed in weeks. We get the FD to sign it off and then the only debate you’ll have is about the size of the prize not whether the numbers are right. It enables a value bridge to be formed and management to be galvanised. Everyone should have one.

One step further for the more sophisticated, is to model the link between Experience Drivers and Financials, enabling a resilient return on investment to be achieved.  The first step involves modelling operational service delivery (and failures) to individual customer satisfaction/commitment research. This requires tagging of customer research to the database and combining individual customer interactions.

The second step is to tag this to the financial performance of customers (repeat purchase, retention, average order value). Obviously this works best when there are reasonably high sample sizes to work with, within a large customer base.

Its easy to convince Executives to prioritise CE investments if you appeal to their desires and offer a compelling value proposition. Just “Show them the money”.

ValueCEM Discipline 4 of 16 that smart organisations use to systematically drive value from customer experience management. See Smart Organisation CE Framework.


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