Five Steps To Create And Sustain A Customer-Centric Culture

Transcription

1 For: Customer Experience Professionals Five Steps To Create And Sustain A Customer-Centric Culture by Samuel Stern and Paul Hagen, April 16, 2014 Key Takeaways Senior Executive Buy-In Is Critical To Success All cultural transformations start with executive support. Customer experience professionals who don t have this support need to either make a successful business case to executives or give up on the idea of transforming their culture until they can make a successful case. Motivate Employees To Start Making Changes Cultural transformations hinge on all employees going along with the proposed changes. That s why CX teams should focus on rallying employees to the transformation effort with communications and celebrations that smooth the path. Embed Customer Centricity Into Core Business Processes Once employees have bought into the transformation, organizations must change supporting policies and process to reinforce the new behaviors. That means updating training, hiring, and compensation practices to prioritize customer centricity. Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA USA Tel: Fax:

2 April 16, 2014 Five Steps To Create And Sustain A Customer-Centric Culture by Samuel Stern and Paul Hagen with Harley Manning and Dylan Czarnecki Why Read This Report Transforming cultures to be customer-centric is one of the toughest challenges that customer experience professionals face. That s because changing the culture of an organization requires the successful orchestration of multiple initiatives. Companies that want to create and sustain a customer-centric culture should follow a five-step process that starts when they secure executive support. They must then create a team to lead the transformation and create a shared understanding of the intended experience. They ll need to rally support for the transformation with all employees and ultimately embed customer experience principles into the organization. Table Of Contents 2 Interest In Customer-Centric Culture Is High As It Should Be But Companies Struggle To Transform Their Cultures To Be Customer-Centric You Can Create And Sustain A Customer- Centric Culture Step 1: Secure Executive Support (No, Really) Step 2: Build A Customer Experience Team To Lead The Transformation Step 3: Create A Shared Understanding Of The Intended Experience Step 4: Rally And Align Employees To The Transformation Step 5: Embed Customer Experience Principles Into The Organization recommendations CX Professionals Must Orchestrate The Transformation Supplemental Material Notes & Resources Forrester interviewed 16 vendor and user companies, including American Express, Cleveland Clinic, gothamculture, JetBlue Airways, John Deere Financial, Root, Safelite, Sage North America (Sage Software), Saskatchewan Government Insurance (SGI), and VCA Animal Hospitals. Related Research Documents How To Build A Customer-Centric Culture March 14, 2014 Drive Customer-Centric Employee Behavior With Rewards And Recognition February 24, 2014 Communication, Training, And Routines: How Companies Socialize Customer Centricity February 20, 2014 How To Hire And Onboard Customer-Centric Employees November 20, , Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please [email protected]. For additional information, go to

3 Five Steps To Create And Sustain A Customer-Centric Culture 2 Interest In Customer-Centric Culture Is High As It Should Be The only way to ensure consistent delivery of superior customer experiences over time is to engage the entire organization in the effort. Engaged employees: Deliver the right experience. Highly engaged workers are more likely to say that they have a good understanding of how they can deliver good customer experiences than their less engaged colleagues. Seventy percent of engaged employees feel that they have a good understanding of customer service, compared with just 17% of nonengaged workers. And 75% of highly engaged employees think that they can actually improve customer service and quality. 1 Deliver a more satisfying experience. Dell found that customer Net Promoter Scores (NPS) were twice as high for experiences that highly engaged employees deliver. 2 And a meta study of 7,939 business units in 36 companies, published in the Journal of Applied Psychology, found that higher employee engagement scores correlated with higher customer satisfaction and loyalty measures. 3 But Companies Struggle To Transform Their Cultures To Be Customer-Centric Despite widespread interest, most companies aren t making meaningful movements in the direction of customer centricity. Although many have tried, they often run into one or more of the common pitfalls that derail these types of efforts: Loss of interest. Many companies embark on a cultural transformation journey only to lose focus before they ve completed the job. Back in 2008, Time Warner Cable unveiled its branded customer experience strategy aimed at creating differentiated customer experiences. It made significant progress over the next three years. But in 2011, it abandoned the strategy when new executives pivoted to a focus on customer acquisition through discounts. The effects of that decision are apparent in Forrester s latest Customer Experience Index (CXi): Time Warner Cable was the lowest-rated TV service provider and the second-lowest-rated Internet service provider. 4 Lack of clarity. Many companies we spoke with said that even though parts of their organizations wanted to be customer-centric, employees lacked a shared understanding of the intended experience they were supposed to deliver. A few years ago, Sage North America created a vision of delivering extraordinary customer experience. The problem was that it didn t clarify what made its experience extraordinary. Call-center reps interpreted extraordinary to mean they should spend 90 minutes on the phone helping customers address issues with products that they hadn t bought from Sage something the reps weren t even well equipped to do. Ultimately, management had to prohibit agents from helping customers with non-sage products. Failure to get broad-based buy-in. Many companies fail to transform their cultures because they don t embed customer centricity into all parts of the organization. When Cleveland Clinic embarked on its patient experience transformation, the original chief customer officer and her

4 Five Steps To Create And Sustain A Customer-Centric Culture 3 team managed to create some pockets of success. But because they didn t involve other senior leaders, they struggled to make substantive changes to how the broader organization performed its daily work. By contrast, her replacement focused on engaging senior leaders from the start. As a result, Cleveland Clinic has been able to execute more far-reaching changes to its culture. You Can Create And Sustain A Customer-Centric Culture Despite false starts and outright failures by some companies, other firms have managed to successfully transform their cultures and even more are in the midst of their own promising transformation efforts. To learn their secrets of success, we interviewed companies like these as well as service providers that assist with transformation initiatives. Our efforts uncovered five steps that help companies achieve a customer-centric culture (see Figure 1): Step 1: Secure executive support (no, really). All of the successful cultural transformations we studied began with executive buy-in: Get it or give up. Step 2: Build a customer experience team to lead the transformation. Cultural transformation requires a core team to make ongoing decisions and orchestrate key initiatives. Step 3: Create a shared understanding of the intended experience. Companies must create and communicate a vision for the intended experience so that all employees know exactly what it means to be customer-centric at their company. Step 4: Rally and align all employees to the cultural transformation. Organizations must motivate employees to change their behaviors and provide customer-centric communications and training to help the process along. Step 5: Embed customer experience principles into the organization. Companies need to support customer-centric employees by aligning processes and systems with their firms customer experience vision.

5 Five Steps To Create And Sustain A Customer-Centric Culture 4 Figure 1 The Five Steps To Create And Sustain Customer-Centric Cultures Create Sustain Step 1 Secure executive support Step 2 Build a customer experience team to lead the transformation Step 3 Create a shared understanding of the intended experience Step 4 Rally and align all employees to the cultural transformation Step 5 Embed customer experience principles into the organization Time Source: Forrester Research, Inc.

6 Five Steps To Create And Sustain A Customer-Centric Culture 5 Step 1: Secure Executive Support (No, Really) We d be doing you a disservice if we sugarcoated this point: Customer experience professionals who don t already have commitment from their executives need to either get it or give up their hopes of transforming their organization s culture. That s because every successful transformation we studied began with a customer experience epiphany by a CEO or COO. Sometimes these epiphanies just happen. But when they don t just happen, customer experience professionals must take the initiative to: Make the business case for customer experience transformation. Customer experience professionals need to base their proposals on three pillars: authority, logic, and emotion (see Figure 2). 5 Authority means establishing credibility with executives. Logic provides the rational justification for investing, which is typically economic benefits. Emotion is the gut feel factor the hot buttons of senior executives, whether it s a vivid vision of a potential future or fear of not keeping up with particularly scary competitors. Help executives connect with the customers point of view. C-level executives are often far removed from day-to-day customer interactions. Customer experience (CX) pros can use voice of the customer programs to help execs make a direct connection to reality as their customers see it. Brad Smith, Sage North America s chief customer officer, uses part of each monthly leadership meeting to play recordings of customer calls for other executives. Brad also established a program where executives sign up to spend time in the call center or join sales teams on customer visits. And he created a new leadership routine of bringing customer stories to their monthly meetings. Seek a visible demonstration of executive commitment. Hard as it might be, getting executives to say that they ll support a cultural transformation is easy, compared with galvanizing them into taking action. One step that s been shown to work involves having leaders communicate the new direction to their teams so that they become the visible face of change. Both General Motors (GM) and Saskatchewan Government Insurance (SGI) asked leaders from across their organizations to do just that. To ensure authenticity, the leaders had leeway to use their own words and stories to convey the new direction.

7 Five Steps To Create And Sustain A Customer-Centric Culture 6 Figure 2 Use Authority, Logic, And Emotion To Make Business Cases For Customer-Centric Culture Tactics Authority: the credibility to make the case for transforming the culture Logic: the rational benefits from transforming the culture Emotion: the gut feel factor that transforming the culture is the right thing to do Examples The Washington Post places a high value on data. As chief researcher for The Post, Laura Evans observed a critically important trend: Post readers used multiple devices to access content on a daily basis. But the specialists who designed, built, and managed products like the print version of the paper, the mobile site, and the website operated in disconnected silos. Laura used data to show that the company needed people to look across products and groups to understand how the use of one product by a customer influenced his perceptions and usage of other products. She was subsequently appointed chief experience officer and given a formal role in helping guide product development in the context of that larger vision. In 2009, Maersk Line confronted the double threat of increasing competition and the aftermath of the financial crisis, which pummelled the shipping industry. As margins shrank, competitors cut prices to maintain revenues. Maersk Line s executive management team realized that customer experience could play an important role in bolstering customer loyalty and protecting margins. It appointed a 17-year company veteran to the new chief customer officer position to lead the transformation process. Lambert Walsh, vice president and general manager of global services at Adobe, created a video to show the CEO and his staff that it was impossible for customers to purchase an upgrade for an individual product within Adobe s Creative Suite. After watching the 7-minute reenactment of a customer going from screen to screen with no success, one of the senior execs was silent and then simply said, You ve got to be kidding me. The responsible business unit subsequently changed the underlying policy that had prevented the purchase Source: Forrester Research, Inc. Step 2: Build A Customer Experience Team To Lead The Transformation In our research, we noted that the first thing executives did once they were bought into the idea of a cultural transformation was to create a team to drive the effort. Sometimes, this involved bringing in a new leader from outside of the firm. More often, the team was assembled from current employees, and a respected executive led it. Regardless of their origins, these teams must: Define the intended experience. When Art Antin, COO and cofounder of VCA Animal Hospitals, decided that the company should transform its culture to be customer-centric, he created a client experience team to spearhead the initiative. The team was empowered to work with the rest of the organization to create a vision for the intended experience and confirm how the company would work in unison to achieve that vision. Focus on creating alignment across the organization. After Dr. Jim Merlino was named the chief experience officer at Cleveland Clinic, his first task was to get buy-in from other key stakeholders across the organization. He had the advantage of being a practicing surgeon

8 Five Steps To Create And Sustain A Customer-Centric Culture 7 who came from within the Clinic s culture, which gave him credibility with other medical professionals. Even so, he started by partnering on small projects to establish trust and build working relationships. For example, he worked with the chief nurse to improve nurse communications with patients the source of one of their most common patient complaints. Support CX teams with virtual colleagues. John Deere Financial s small customer experience team was bolstered by its Customer Champions program. 6 The company identified approximately 30 employees across the organization who were customer-centric and trained them in CX skills like storyboarding and journey mapping. Although the champions rotated out of their extra responsibilities after two years, they didn t revert back to their old ways of thinking they remained hyper-attuned to customer issues. Realizing this, John Deere Financial has involved alumni of the Champions program in ongoing projects, expanding its virtual staff with each new group of champions. Step 3: Create A Shared Understanding Of The Intended Experience Sometimes, employees appear to be resisting change when the real problem is that they don t understand what s expected of them. That s why the next step in cultural transformations is to ensure that all employees understand the experience that they re supposed to deliver. To do that, companies should: Communicate the vision for the intended experience. Employees need a clear, concise description of what the company is trying to achieve and how they ll help achieve it. When Cleveland Clinic wanted to transform its organization to deliver great patient experiences, it provided comprehensive training for all 42,000 employees. The training walked employees through its new patient experience principles and showed them how they should embody those principles in their daily tasks (see Figure 3). Share customer experience success stories. In the early stages of the transformation, employees need ongoing tangible examples of what is expected of them. That s why companies must collect and share stories of customer interactions that meet the standards for the intended experience. When VCA Animal Hospitals rolled out its nine customer I Wants, it asked employees to share examples of how they were already fulfilling those needs (see Figure 4). The real examples that employees provided helped other employees understand what they could do to bring about change.

9 Five Steps To Create And Sustain A Customer-Centric Culture 8 Figure 3 Cleveland Clinic s Patient Experience Principles Training Cleveland Clinic s planned training outcomes What it means to put patients first and how to do that Foster understanding that all employees are caregivers and all part of a larger team Service excellence how to treat patients and how to apologize Review organizational values Source: Forrester Research, Inc. Figure 4 VCA Animal Hospitals Defined Nine Customer I Wants Source: VCA Animal Hospitals Source: Forrester Research, Inc.

10 Five Steps To Create And Sustain A Customer-Centric Culture 9 Step 4: Rally And Align Employees To The Transformation Once employees know what they re supposed to do, they need to be motivated to do it. That s why CX pros should: Explain what s in it for employees. Humans are hardwired to be resistant to change. Describing why the transformation will benefit employees directly can help break down some of that natural resistance. Safelite AutoGlass started with its People First initiative to improve employee experiences before moving on to the customer. As part of that initiative, it introduced the People Powered pledge for employees and committed to the training and leadership development needed to deliver on the promises in the pledge (see Figure 5). Feature CX principles in corporate communications. Companies need to integrate their customer experience principles into corporate communications, from management briefings to town hall meetings. Consistency and repetition are key: SGI said that it s not about telling employees six times; it s about telling them 66 times. That s why it created two 90-day communication plans to script the first six months of employees transformation. The plans included creative approaches like its Customer Promises Tour, which was modeled after a concert tour. It used concert posters to reinforce customer promises, gave out backstage passes with the promises printed on them, and encouraged employees to Join The Band. It even made up a set list of song titles for each of its three customer promises: Cover, care, and connect. Create regular celebrations of customer-centric employees. Visible celebrations of customercentric employees demonstrate organizational commitment to the transformation. After VCA Animal Hospitals rolled out its new customer experience vision, it encouraged all of its hospitals to hold an event in conjunction with the world CX Day on October 1, One hospital put up poster boards with employees pictures on them. Other employees wrote examples on the posters of what each employee was doing to deliver the intended client experience. The one-off celebration has turned into monthly events at many of its hospitals.

11 Five Steps To Create And Sustain A Customer-Centric Culture 10 Figure 5 Safelite AutoGlass People-Powered Culture Source: Safelite Source: Forrester Research, Inc.

12 Five Steps To Create And Sustain A Customer-Centric Culture 11 Step 5: Embed Customer Experience Principles Into The Organization Motivated employees are ready to modify their behaviors. But to do that, they need training plus ongoing guidance and reinforcement. At this step, companies should: Provide training on how to deliver the intended experience. Companies should modify their old training programs to include content specific to delivering their new intended experience. 7 BMO Financial Group s Institute for Learning and development team integrated an interactive version of its customer experience learning map into new hire orientation training (see Figure 6). The CX learning map is also a foundational part of the compulsory one-day customer experience program within BMO Financial s Leader Development program. Update employee competency models to include CX principles. Companies should rewrite competency models to include behaviors relevant to their intended experience. SGI created a competency model that defines six levels of escalating proficiency for customer-driven focus; each level includes detailed descriptions of the desired behaviors and examples of how they sound and look. For example, new employees should provide consistent customer experiences and must take personal responsibility to get promoted. To be eligible for the assistant vice president (AVP) and VP levels, employees must create customer strategies and inspire others to be customer-focused. Redesign employee incentives to reward customer centricity. Grocery chain Kroger launched its Customer 1st initiative to focus employees on delivering better customer experiences. It identified four key levers of customer satisfaction with the shopping experience, two of which tied directly into the experience its employees provided (see Figure 7). It subsequently modified store performance evaluations to focus on these areas and tied part of senior leader bonuses to performance on these criteria. Frontline employees at Kroger also have part of their bonuses tied to behaviors like greeting customers, which are key drivers of customers in-store experience. 8 Integrate CX principles into hiring and onboarding. With current employees on their way to being customer-centric, it s time to turn attention to future employees. 9 American Express changed how it hires new employees. For example, it no longer looks exclusively for call-center experience when filling customer care positions. Instead, it looks for candidates with relevant experience from a range of caring professions including nursing and hospitality. It also trained hiring managers and human resources staff to focus on candidate problem-solving capabilities during the screening process. It s found that candidates with an affinity for solving problems perform best at dealing with customers on the phone all day. It also revised its onboarding process to focus more on customer conversations. It put new hires on the phones much earlier, assigning them mentors to coach them in the first few weeks. These mentors have skin in the game part of their performance is tied to the performance of the new hires.

13 Five Steps To Create And Sustain A Customer-Centric Culture 12 Figure 6 BMO Financial Group s Interactive Learning Map Facilitates Customer Experience Training Source: BMO Financial Group Source: Forrester Research, Inc. Figure 7 Kroger s Customer 1st Strategy Describes Key Drivers Of Its Customer Experience Kroger s Customer 1st principles Our people are great! I get the products I want, plus a little. The shopping experience makes me want to return. Our prices are good. These two principles tie directly to employee behavior. Source: Kroger Source: Forrester Research, Inc.

14 Five Steps To Create And Sustain A Customer-Centric Culture 13 Recommendations CX Professionals Must Orchestrate The Transformation Many of the cultural transformation steps require action by senior executives, but CX teams have their own role to play. They should: Track the impact of cultural transformations. JetBlue, a company known for its rigorous customer experience measurement, tracked the impact of its Culture Is Service transformation program from the start. 10 The internal assessment and evaluation team members created a comprehensive measurement plan comprised of operational metrics plus customer perception metrics that they believed would be key markers of shifting culture. This rigor allowed them to assess the impact of the cultural transformation initiatives. For example, Net Promoter Scores were six points higher on coast-to-coast flights when at least two out of the three flight attendants had gone through the culture training. Keep senior leaders connected to customer interactions. Each month at Cleveland Clinic, senior leaders visit different parts of the hospital to observe and review the patient experience. They look for stories that exemplify caregivers putting patients first. They also talk to patients and look for opportunities to make improvements to the overall experience. Each session starts with 20 minutes of prep, followed by an hour of patient observations and interactions and then 20 minutes at the end to debrief and share with each other what they witnessed and learned. The best ideas for enhancing the patient experience are fed back into a continuous improvement initiative. Supplemental Material Companies Interviewed For This Report Alaska Air American Express Andrew Reise Cleveland Clinic dunnhumby General Motors gothamculture Hampton Inn JetBlue Airways John Deere Financial Manifest Digital Root Safeco Insurance Safelite Sage North America (Sage Software) Saskatchewan Government Insurance (SGI) VCA Animal Hospitals West Monroe Partners

15 Five Steps To Create And Sustain A Customer-Centric Culture 14 Endnotes 1 Seventy percent of engaged employees feel that they have a good understanding of customer service, compared with just 17% of nonengaged workers. Source: Steve Miggo, Transforming a Company Culture to Achieve Customer Delight, Customer Service Group ( SafeliteAutoGlass_0112.pdf). Seventy-five percent of highly engaged employees think that they can reduce costs and improve customer service and quality. Source: Martin Hofschroer, Greater Employee Engagement Can Improve Customer Service, EzineMark.com ( 2 Net Promoter, Net Promoter Score, and NPS are registered trademarks of Bain, Fred Reichheld, and Satmetrix Systems. Source: Bain ( Satmetrix Systems ( 3 In the 2002 paper, Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis, Harter, Schmidt, and Hayes found strong linkages at the business unit level between employee engagement and business outcomes like customer satisfaction, productivity, and profits. Source: James K. Harter, Frank L. Schmidt, and Theodore L. Hayes, Businessunit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis, American Psychological Association, April 2002 ( optiontobuy&id= ). 4 Time Warner Cable had slight declines for its CXi scores in both TV and Internet, even as most other companies in those industries improved their scores from 2013 to See the January 21, 2014, The Customer Experience Index, 2014 report. 5 To make the business case, customer experience professionals should adopt well-known principles of persuasion by targeting one or two executives to sell the project to in advance, leveraging the firm s public commitment to customers and preparing a scaled-back but still realistic plan B. See the June 17, 2008, How To Get Funding For Web Site Improvements report. 6 Change agents have helped several companies transform their cultures. See the May 31, 2012, How Customer Experience Change Agents Transform Culture report. 7 In addition to changing existing training, companies add CX-specific training as well. Prime Therapeutics created an immersive customer experience room to introduce more than 3,000 employees to its five target personas. See the February 20, 2014, Communication, Training, And Routines: How Companies Socialize Customer Centricity report. 8 Companies like US Cellular and Southwest have embedded customer-centric behaviors into performance evaluations. See the February 24, 2014, Drive Customer-Centric Employee Behavior With Rewards And Recognition report. 9 Companies can change the way they attract, screen, and onboard new hires. See the November 20, 2013, How To Hire And Onboard Customer-Centric Employees report.

16 Five Steps To Create And Sustain A Customer-Centric Culture JetBlue is rigorous about connecting perception, outcome, and operational metrics to have a full picture of the customer experience. See the August 18, 2011, Lessons Learned From The 2011 Voice Of The Customer Award Winners report.

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