How Customer Experience Transforms and Defines Luxury Brands
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1 How Customer Experience Transforms and Defines Luxury Brands Harley Manning, VP & Research Director January 16, 2013
2 Why customer experience? Why now? 2012 Forrester Research, Inc. Reproduction Prohibited 2
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7 Louis Vuitton Closes eluxury End of June
8 Outside In The power of putting customers at the center of your business
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10 How customers perceive their interactions with your company
11 Enjoyable Easy Meets Needs
12 Even if they re more expensive and I have to pay the difference in the ticket price myself, it s worth it Forrester Research, Inc. Reproduction Prohibited
13 Customer experience correlates to loyalty Willingness to consider for another purchase Likelihood to recommend to a friend Likelihood to switch business to a competitor
14 Customers who had a good experience invested 4.5x more money with Fidelity Their investments added up to billions of incremental dollars per year
15 Two U.S. stock portfolios Top 10 publicly traded companies in the Customer Experience Index CX Leaders Bottom 10 publicly traded companies in the Customer Experience Index CX Laggards
16 Cumulative total return 5-year stock performance 30% 20% CXi Leaders 22.5% 10% 0% -10% S&P 500 Index, % -30% -40% -50% Source: Watermark Consulting CXi Laggards -46.3%
17 2012 Forrester Research, Inc. Reproduction Prohibited
18 Comprehensive Best Practices for Creating a Great Luxury Goods Customer Experience 2012 Forrester Research, Inc. Reproduction Prohibited
19 Strategy Customer Understanding Design Measurement Governance Culture
20 Strategy Customer Understanding Design Measurement Governance Culture
21 Discipline 1: Strategy 2012 Forrester Research, Inc. Reproduction Prohibited 21
22 Burberry Regent Street brings our digital world to life in a physical space for the first time, where customers can experience every facet of the brand through immersive multimedia content exactly as they do online. Walking through the doors is just like walking into our website. It is Burberry World Live. Angela Ahrendts CEO Burberry 2012 Forrester Research, Inc. Reproduction Prohibited
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25 2012 Forrester Research, Inc. Reproduction Prohibited
26 2012 Forrester Research, Inc. Reproduction Prohibited
27 Discipline 2: Customer Understanding
28 Customers would not download and install a mobile app for this infrequent task They often plan their next exotic vacation during downtime in a limo 2012 Forrester Research, Inc. Reproduction Prohibited
29 2012 Forrester Research, Inc. Reproduction Prohibited
30 2012 Forrester Research, Inc. Reproduction Prohibited
31 Discipline 3: Design
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33 Repeatable problem-solving process that incorporates the needs of customers, employees, and other business stakeholders 33
34 Strategy Customer Understanding Design Measurement Governance Culture
35 Strategy Customer Understanding Design Measurement Governance Culture
36 Discipline 4: Measurement
37 Perception What customers think happened and how they feel about it Descriptive What happened in the real world Outcome What business result you expect from what happened
38 Porsche uses NPS to gauge the health of the overall customer relationship but Dealers started rigging the system by offering incentives to customers for higher NPS scores Dealers inconsistent behavior and pandering to customers was damaging the brand image Porsche is now planning to deemphasize NPS 2012 Forrester Research, Inc. Reproduction Prohibited 38
39 Really the NPS doesn t have much business value, it s just an indication of the customer s view at that moment in time. The real business value comes from the words people use in their verbatim answers. Nina Jones Head of Customer Experience Porsche Cars Great Britain 2012 Forrester Research, Inc. Reproduction Prohibited
40 2012 Forrester Research, Inc. Reproduction Prohibited Discipline 5: Governance
41 Governance practices Standards Policies and processes Project portfolio management Role-specific responsibilities 2012 Forrester Research, Inc. Reproduction Prohibited 41
42 Rise of the chief customer officer Emerging role: 550 identified in 2012 Average tenure: Two years Typical background: Executive-level position (not customer experience) Notable: Cleveland Clinic, Fidelity, GM 2012 Forrester Research, Inc. Reproduction Prohibited 42
43 If I can't differentiate and make you feel special about the experience, then it is all about price, and then we're no different than any other commodity product in the car business." Steve Canon CEO Mercedes-Benz USA 2012 Forrester Research, Inc. Reproduction Prohibited
44 Discipline 6: Culture
45 Culture practices Hiring Onboarding and Training Rituals and Routines Rewards 2012 Forrester Research, Inc. Reproduction Prohibited 45
46 Service Values: I Am Proud To Be Ritz- Carlton I build strong relationships and create Ritz-Carlton guests for life I am always responsive to the expressed and unexpressed wishes and needs of our guests I am empowered to create unique, memorable and personal experiences for our guests 2012 Forrester Research, Inc. Reproduction Prohibited 46
47 2012 Forrester Research, Inc. Reproduction Prohibited
48 Strategy Customer Understanding Design Measurement Governance Culture
49 What should you do next? Take our CX maturity assessment
50 40 individual practices
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53 Thank you Harley blogs.forrester.com/harley_manning #outsidein outsidein.forrester.com
Multichannel Customer Experience
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