Briefing Paper. How to Compete on Customer Experience: Six Strategic Steps. gro.c om SynGro SynGro Tel: +44 (0 )

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1 Briefing Paper How to Compete on Customer Experience: Six Strategic Steps

2 How to Compete on Customer Experience: Six Strategic Steps Voice of the Customer as a term has come to reflect the growing understanding that customers hold the key to future financial success. Investing in customer experience has become a strategic priority for Fortune 500 firms and challengers alike. The organisations who are getting it right by using customer feedback to guide their processes are reaping the rewards. However, if a customer s experience is consistently poor, if they are asked their opinion and subsequently ignored there is only one outcome: Quite simply, they will become someone else s customer. Customers take a holistic view of the business which they buy from. They do not differentiate between internal functions and the business units responsible for delivering whatever service or product they have purchased. Customers just want results and in the meantime, far too many businesses are unable to answer the simple question: Why do some customers stay longer and spend more whilst others leave in a blaze of apathy? Companies who fail to listen to customers and assume they have all the answers typically experience end results that, though well intentioned, are disjointed and ultimately ineffective. Your organisation must harness the Voice of the Customer in a meaningful way to drive the changes that customers want while improving what they already love. This briefing paper outlines six strategic steps to create and maintain a VoC programme that achieves real competitive advantage through customer experience management. In the UK alone, businesses are losing 12bn a year as a result of providing poor customer experience, forcing half of customers to take their business elsewhere. - MyCustomer.com

3 1. Develop a VoC vision directly aligned to business strategy It is fundamental that the Voice of the Customer (VoC) programme has a clear, focused strategy which is directly aligned to your organisation s commercial goals. Your VoC programme should permeate all aspects of the business; every business unit, every function, segment and every management level. If it doesn t, the programme s success will be limited and most likely temporary. Using the voice of the customer to change a business from a product to a customer focus is not achieved overnight. It is essential that the strategy sets out a clear path to where the business aspires to be. Without this commitment and the ownership of the CEO it will be an uphill struggle for the VoC programme to start to change the culture of the business. Investing in customer experience is fundamentally the same as any other business initiative: it must be focused, measurable and produce a tangible return on investment. There are just too many organisations who listen to their customers but have limited ability to drive improvements based on their feedback. SynGro s VoC research which spanned 30 countries and six industry sectors highlights that only 8% of leading businesses are able to use their customer feedback to drive true business change. The lack of an aligned VoC strategy which is championed by the CEO is one of the failings of the 92%, restricting scope for the Voice of the Customer to fuel competitive ambitions.

4 2. Build internal consensus and make the jump to customer-centricity The entire business needs to buy in to the VoC programme. Too many customer-centric change initiatives fail to engage with all the business units within a group. Their inability to build a compelling business case and win over these budget holders is a guaranteed recipe for failure. Whether we refer to it as a customer experience audit, a VoC design & scope or a requirements gathering phase the origin of VoC best practice is the same: Start with a good diagnosis and avoid fatal half measures. Engage with the stakeholders from across the business. Spend the time and energy to establish absolute clarity over what the VoC programme needs to produce to support your goals and realistically deliver true value to each business unit. Organisations that underestimate the importance of this step find themselves implementing a disjointed approach undercut by internal criticism and confusion. To build a customer-centric organisation that clients can recognise and recommend as being driven by their interests requires everyone to be engaged. Ensure the stakeholders fully understand the implications of any developed strategy. The journey from evolving an organisation from a product to a customer focus requires commitment. Once the VoC programme has engaged with customers they expect actions to be taken to improve their experience. Breaking down departmental silos and establishing real commitment to customer experience is sustained by communicating the value of CX. To this end, the right mix of metrics is crucial.

5 3. Ensure your metrics are a catalyst for change A strategy is just words if there are no measures. At its heart the VOC strategy must be measured against clear and relevant metrics and mapped to your specific business operations. These metrics should go beyond the standard customer satisfaction measures such as NPS, Customer Effort Score, Repurchase Intention and so on. The VoC strategy must include commercial measures such as average customer spend, share of wallet, account profitability - the measures that impact most. Without inclusion of these financial elements the VoC programme will struggle to create resonance and drive true cultural change in the business. Reporting progress against the strategy must be built into the management rhythm of every part of the enterprise. Over time it will permeate into the DNA of the business and smooth the way for the senior management to migrate from a profitability focus to aligning with customer satisfaction. This has to be planned and part of an agreed and understood evolution to becoming customer-centric. VoC strategies that enhance competitiveness encompass not only the technical aspects of implementing a programme across differing channels and touch points but embrace a coherent change plan for front-line staff. In this way staff are equipped and empowered to respond directly to customer feedback and get it right first time. Real competitive gains require tangible commitment to learning and improving. VoC strategies that underperform are often hampered by focusing on metrics and the technology to establish real-time measures without adopting an integrated approach to engaging with staff. Front-line employees should be supported with the cohesive training and coaching they need to take full ownership of the customer s enquiry, fulfil customeroriented KPI s and deliver an outstanding experience.

6 4. Establish financial linkages to prioritise customer improvements It is essential that customer experience initiatives are able to correlate movements in customer satisfaction (measured by whichever combination of metrics is chosen) to gains in commercial KPIs. Average spend, share of wallet, account profitability, retention and acquisition must be positively affected by your investment in CX. For years organisations have been claiming to put their customers first, while at the same time disappointing them across multiple touch-points. Today this approach is no longer sustainable. Commoditisation has undercut the traditional areas of differentiation. Customer experience has risen rapidly to become pivotal in creating true differentiation. It is little surprise that only 8% of businesses can confidently declare that they have been successful in improving their business and creating cultural change in response to customer feedback. Our research has shown that whilst 90% of large organisations have a formal customer feedback programme, less than a third communicate to their customers what they are doing to improve as a result. Too few companies are acting strategically on their feedback. If you ask for an opinion you must: Listen and have the right tools and metrics to measure and create meaningful insight. Do something to improve and ensure something is the right thing. Communicate your action back to the customer. If you do then you will be better than 69% of your competitors. Identify what the root causes are of the issues and use insight to drive change in terms of both process and people. Prioritise your response based on customer value / potential customer value:

7 If you want to prioritise you must be able to: (i) combine customer satisfaction information with segmentation, financial & operational measures (ii ) Know what data to combine (iii) Visualise it (iv) Embed into your organisation s management rhythm e.g. monthly reports The above graph illustrates key accounts of a multi-national B2B organisation, mapping the % of operating profit each account represents to NPS score. In an ideal world all accounts would be in the top right - happy, profitable customers who will stay, spend and recommend. However, in reality this organisation must prioritise responses according to financial risk and opportunity, gaining competitive, strategic advantage from their customer insight. The large green circle in the bottom right represents a very satisfied account that in spite of its size does not contribute much to actual profits. Using this knowledge, actions can be taken to make engagement with this company more cost effective, using insight to ensure that the features that make this customer so happy are not compromised as a result. In the top left with the large red circle we see a different problem. Here is a very profitable account at risk of churning due to high levels of dissatisfaction. Priority actions must be taken to uncover the concerns of people within this business, analyse the root cause and feed back changes to increase their satisfaction. Companies that can use financial measurements in tandem with CX metrics to confidently assess different commercial outcomes are those best equipped to allocate resources intelligently, improve their bottom line and compete in a truly outstanding way.

8 5. Benchmark intelligently Identifying comparative advantage is an essential aspect of using customer experience to compete. However, many companies benchmark inappropriately, wasting energy and misdirecting resources as a result. While it is tempting to seek out an aggregated industry NPS score, this is a flawed approach. Using an average NPS figure based on data of uncertain origin and timing risks staff referencing it and thinking 'We're doing terribly!' or 'We're doing superbly!. Such an outcome has the potential to drive the wrong customer actions. Staff may become demotivated or lose faith in the programme if unreliable external benchmarks are used. What organisations should do is apply internal benchmarking within and between business units to incentivise staff and guide best practice. The variables between even close competitors is enough to reaffirm that the only NPS data that matters is that which is gleaned from your own customers. The best approach in becoming competitive in customer experience is to ask your own customers to define who your competitors are and provide both numerical and verbatim comments on how you compare. The figure below illustrates selfdefined customer priorities ranging from most important at the top, to least important at the bottom. By using relational and transactional surveys appropriately, a picture emerges of the company s areas of competitive advantage as painted by actual customers. This model allows for strategic decision making to allocate resources away from non-crucial areas to boost customer experience in the essential areas that determine whether or not a customer stays or churns.

9 6. Resource your programme Some organisations prefer a model which relies heavily on supplier expertise and support with many VoC activities outsourced, such as telephone surveys and insight briefings. Others prefer a light touch relationship with their VoC partner supplying only the technology. If you have the right VoC technology then the resource requirements to manage a global programme can be minimised. Typically in a B2B environment we recommend a core VoC team of three to four dedicated staff, supported by a minimum of one allocated person per business unit. The VoC programme requires a robust governance structure which delineates clear ownership and operating responsibilities. We strongly advocate the CEO is the programme sponsor, with tactical programme ownership and responsibility for driving programme KPIs designated to a dedicated senior executive who is their direct report. The team, whatever its size, can t be toothless. Their reports and recommendations must be built into the management rhythm of the business. Failure to do so will prevent effective closed loops let alone creating any true systemic business improvement. Select staff who are passionate about customers, who have the energy to lead changes in the business. The team involved in your VoC project must be champions for the customer. Start with looking who you have at your touchpoints. Talk to them, spend time with them, ask their opinion, and train them. If they are the wrong fit don t hesitate to replace them. It is these small steps that will send a big message to your customers and to your employees, positioning your business to truly compete on Customer Experience.

10 About At SynGro we not only provide world class technology that will transform your insight into customers attitudes and ambitions but also go much further. We recognise that investment in technology can bring risk. You need to get the biggest possible bang-for-your-buck that you can and you need to do so quickly. For this reason we not only provide the right technology also provide highly experienced customer service consultancy that ensures that you get business buy-in and commitment to deliver transformational change that your customers will notice and that will drive profitability, share price and reputation. We do this through the alignment of Commitment based Management practices that are specifically designed and proven to take quality improvement and customer service programmes to the level where culture change ambitions are realised and sustained. Even if you already have feedback systems and processes in place we can bring skills and experience that will design a programme focused on maximising your return on investment and ensuring that your customer feedback programmes are being translated into meaningful organisational and personal change. Contact Nigel Martin Director nigel.martin@syngro.com Tel: +44 (0) Web: Connect Follow Us Connect With Us