Customer Experience. How to build foundations for true loyalty

Transcription

1 Customer Experience How to build foundations for true loyalty A Salmat White Paper, July 2013

2 Table of contents 1. Customer Loyalty: much more than points 3 2. The battle for the empowered customer Customers expect more Data, data everywhere Switched on Global competition 6 3. Building the foundations for better loyalty Know your customer Define what you stand for Think across channels Deliver again and again The road to target About Salmat 14 2

3 1. Customer Loyalty: much more than points Remember when customer loyalty programs were first introduced? Customers were given a card and told to collect points. Over time, points led to discounts and prizes. Brands would build on their program, adding new rewards and perhaps more tiers for the big spenders, all the while believing that they were building customer loyalty. This system was designed for consumers of the early 1980s, consumers who had money to spend but fewer brands to choose from. Since then the retail landscape has changed dramatically. Today s consumers are more demanding, expecting more from brands and making countless comparisons before they buy. However, despite this evolution, many companies still believe that giving consumers a loyalty card is all they need to do to build customer loyalty. And this couldn t be further from the truth. Loyalty is inextricably linked to customer experience. The way that customers experience a brand across all touch points affects the way they see the brand. Loyalty is an emotional concept, and creating loyalty goes further than the transactional process it requires interactions that foster a positive emotional response. What s more, customer loyalty doesn t come from one exceptional experience; it comes from consistently great experiences delivered time and time again. A loyal customer is more than a satisfied customer. Customer loyalty shows up in greater share of the customer's wallet, higher frequency of purchase and social advocacy. Loyal customers spend more in an average transaction. They tell their friends, families and (increasingly) social networks about you, sending referrals to you and becoming your most effective sales channel. The good news is new technologies and channels have opened the door for retailers to better understand their customers and use these insights to deliver an experience that will drive loyalty. The bad news is only 25 percent of companies have a well-developed strategy in place for improving customer experience (Foviance Multichannel Customer Experience Report 2011). As a relatively new discipline, CEM (Customer Experience Management) is not yet embedded into the cultures and working practices of most businesses. As a result, many 3

4 companies are cobbling together various systems and channels across functions to get the job done. To improve customer loyalty, companies need a clear strategy of what they want their customer experience to be. This paper explores four key steps companies need to take to build a robust foundation for an exceptional customer experience: Know the customer Define what you stand for Think across channels Deliver again and again With these elements in place, a company can successfully build loyalty. 4

5 2. The battle for the empowered customer Between rapidly growing customer demands, increased data and the availability of multiple interaction channels, the traditional definition of customer experience is evolving. 2.1 Customers expect more Today s consumers are more attuned to the customer experience than ever before. They pay close attention to brands. They examine which brands work for long-term relationships and which are after a quick win. Furthermore, customer expectations of how companies should interact with them are rising. They want to deal with companies on their own terms, at their own convenience and through the channels of their choosing. Increasingly they expect companies to know them at every touch-point and provide a personalised service that adds value. Consequences are dire if these expectations aren t met: research shows 95 percent of customers have taken action as a result of a bad experience. Of those, 79 percent told others about their experience (Customer Experience Report, Harris Interactive 2010). 2.2 Data, data everywhere Consumers know there is big data available to companies, and they expect it to be used by brands to improve the service and product offering, to target their communications and treat them as an individual. In other words, they expect more data to lead to a more authentic, relevant customer experience. What customers are doing with data has also changed. There is far more information available to customers to help them choose where to spend their money. Research tools like Lasoo.com.au, price comparison websites, and localised offers from apps such as Foursquare have truly empowered consumers to scrutinise pricing and service offerings. If one company is going to charge 20 percent more than everyone else, they need to have a very clear and valuable service offering if they want customers to remain loyal there s nowhere to hide anymore. 5

6 2.3 Switched on There is a multiplicity of new technologies out there enabling companies to do business almost anywhere from anywhere and build relationships with their customers through channels other than traditional bricks and mortar. At the same time, traditional channels have become fragmented. The age of mass market products and broadcast advertising is being replaced by tailored offerings, personalised communications and integrated multichannel experiences. Consumers are embracing these new technologies and are far more prepared to shop through different channels. They move incredibly fast to try new ways of engaging with companies, from Twitter and Facebook to mobile apps. While these technologies create new and exciting opportunities to engage customers, organisations can be overwhelmed by the complexity of getting their message to the right customers at the right time in the right place. 2.4 Global competition No matter the industry, there are more players battling for a share of customers wallets. Brands face increasing competition from international companies attracted by the relatively wealthy Australian shopper, a favourable exchange rate and the ability to utilise a lower cost base abroad. And these aren t small companies we re talking about some of them are successful, established brands who are very good at what they do. By entering the market in Australia, they are raising the bar for the more established players. You only need to look at online clothing company ASOS and its effect on established retailers like David Jones and Myer to understand the true impact of these new arrivals. 6

7 3. Building the foundations for better loyalty Delivering on these heightened customer expectations and building the relationships that will enable those organisations to thrive requires companies to do more. They need to understand their customers, define what they stand for as a brand, and engage their customers accordingly. They need to actively managing conversations through multiple channels across the entire customer lifecycle. There are four key steps needed to build a solid foundation for an exceptional customer experience and, ultimately, improved loyalty. Customer experience is not a complex, intangible dream for brands to strive for - it can be accomplished through a systematic approach. 3.1 Know your customer Today s customers want to feel valued and listened to; they want personalised experiences that aren t provided to every customer. However most businesses are unable to deliver such experiences because they are only able to scratch the surface of their most valuable asset: customer data. Really knowing your customer means understanding their values and sense of worth. You need to know what drives your customers to buy, what excites them and how they interact with your brand. Take channel marketing. Only 40 percent of marketers know how their customers behave across channels (Forrester 2012). How can brands expect to reach their customers and engage them without knowing how customers are using the various channels? Companies that don t listen to their customers have large gaps between what their customers expect and what the actual customer experience is. In order to achieve a deeper level of understanding, you need to first unlock the value in your customer data. Assess the types of data and information available and how it can be used to synchronise targeting, promotions, and personalisation so that you can provide tailored experiences for every customer. The more refined the customer data, the greater the potential for personalisation. Your goal should be to create a single customer view. You need to be able to identify the individual no matter how they interact with your brand. The good news is that there is an 7

8 array of sophisticated systems and databases out there that are capable of identifying and targeting key customer segments, and matching them with the most effective channel and offer. In the United Kingdom, Tesco has proved that clever use of customer data can lead to better loyalty. Through its Tesco Clubcard rewards program, introduced in 1995, the supermarket collects information on customers shopping habits a staggering 13 million British households. Tesco had the vision to see that really understanding their customers was the key to customer loyalty and satisfaction. The data allowed Tesco to gather detailed information about individual consumers' buying habits, while engaging customers through highly targeted and relevant offers both for new products and products they already buy. Tesco has also used data collected from its grocery shoppers to launch a wide range of new products and enter new markets including home electronics, personal finance, insurance, mobile and clothing. By delivering a consistent experience through these new businesses and creating special offers and discounts for Clubcard holders, Tesco has quickly become a significant competitor in each market entered. 3.2 Define what you stand for Customers are loyal when they are engaged with a brand and what it stands for. It follows, then, that customer experience is naturally aligned with branding efforts. Examine your brand and define it in terms of the ultimate promise to the customer. What is your customer experience ambition? The most successful companies focus on the vital few elements of the customer experience that matter most, whether it s the lowest prices, customer service, fast delivery or noquibble return policies etc. Some companies choose to get to know their customer first and base their brand promise on what is of most value to their customer. Other companies 8

9 define their brand first and then choose the customers they want to target accordingly. Either approach can work, so long as the customer values and brand values are aligned. Research shows that the majority of loyal customers (58 percent) consider best value for money offers from their favourite retail brands as the best way to gain their ongoing endorsement (Epsilon 2013 Australian Consumer Loyalty). But value for money alone isn t enough. Customers also expect consistently good service and quality products during the initial sale and afterwards. Many brands choose to define their customer experience with seamlessly exceptional service in other words, ensuring that every part of the organisation makes it easy to do business with its customers, from the call centre to the online path to purchase, delivery process, and so on. Research shows 40 percent of people began purchasing from a competitive brand because of its reputation for great customer service and 82 percent of people have stopped doing business with a company due to bad customer service. Customer Experience Report, Harris Interactive 2010 Apple and O2 are two examples of companies who know what they stand for and have successfully translated this to a unique customer experience: Apple: It should come as no surprise that Apple has been ranked the best computer company for customer experience in the 2013 Temkin Experience Ratings. Nor that it is the UK s number one CoolBrand for The two are inextricably connected. Apple is a prime example of a brand that has built a strong emotional connection with its large base of loyal customers through product leadership, a unique retail experience and a consistent cross-channel delivery of the Apple brand promise. Apple is known for its strong skills in the customer service department the Genius Bar is frankly a stroke of genius. But it goes deeper than that. Apple aims to make its customers feel better about themselves because they choose Apple products they feel smarter and with a touch of coolness. It s the emotional connection, backed up by exceptional service, that inspires customer loyalty. O2: This telecommunications brand is a frontrunner for CEM, having culturally ingrained customer experience as being the responsibility of every single employee. The brand utilises a wide range of research, insight and mapping techniques, technology and employee engagement to successfully deliver its customer experience program. As a result, it turned the UK market on its head by giving its current customers better offers than new customers, and delivering unique special offers and services aligned with its core target market. The 9

10 brand sponsored and renamed one of the UK s premier event venues The O2, and also sponsors the England Rugby squad, meaning O2 customers have exclusive access to major sporting events and concert tickets for the biggest and newest acts before anyone else in the UK. Their marketing, brand and offer strategy is aligned and well-targeted at young, active, social consumers creating a consistent customer experience that makes their customers feel part of a community. Sephora: The international cosmetics and beauty retailer has incorporated technology as a central part of its customer experience. Today, Sephora has almost 5 million Facebook fans, 900,000 Twitter followers, plus mobile devices make up one-third of all Sephora.com traffic. Sephora has done more than embrace smart technology; it is embracing smart consumers, those people who live for technology. Therefore by creating digital experiences that make its customers lives easier, Sephora is strengthening its customer relationships and growing loyalty. No matter what business you re in, there s something to learn from how these leaders approach customer experience. What they have in common is the way they have crafted an experience that they know customers will value, and they deliver that experience consistently. 3.3 Think across channels There is no longer a single channel dominating the entire customer journey. An experience at one touchpoint will impact and influence another, determining the overall experience a customer walks away with. Each touchpoint across every channel is an opportunity to build value into the customer relationship, and businesses can achieve better customer loyalty if the brand is consistent across all touchpoints. However, only 27 percent of companies rate their multichannel customer experience as good or excellent (econsultancy 2012). This provides an opportunity for brands to set themselves apart using cross-channel customer engagement. 10

11 A successful multichannel experience depends on two factors: customer preference and communication relevance. Different customers prefer different channels of communication and interaction, and different types of interactions are only appropriate for certain channels. A consumer may prefer to browse a catalogue, order online and pick up in-store. The same consumer might receive customer service tips via Twitter, review the product on Facebook, and call a help desk for support. The key to making this work is data. How do your customers want to be communicated with? Once you understand their preferences, you need to ensure activity in one channel is reflected across the rest. For example, allow wish lists, favourites, purchase history, and profile information to be easily accessible in any channel. John Lewis is a prime example of a company who does this exceptionally well, having just won the Multichannel Retailer of the Year title at the UK s Retail Week awards. The British department store offers numerous innovative shopping experiences through digital channels. The seamless customer experience was built on the knowledge that about 60 percent of John Lewis customers buy both online and in shops ( Managing Director Andy Street summed it up perfectly when he said, The art of sales is consistent across channels they re not even supposed to know or see or realise which channel they re using because it s one overall customer offer. Its Click-and-Collect service, launched in 2009, has successfully created a multichannel presence for John Lewis, allowing shoppers to purchase products online and collect them from its own stores and those of its sister brand, Waitrose, across the country. More recently, it has taken steps towards an even more personalised customer experience with My John Lewis. This allows the customer to be recognised as an individual, with the company using their whole purchase history to make suggestions of products they might like. The company is also utilising the growth of the mobile channel by providing an app to complement the customer journey in stores. The app allows customers to scan barcodes and to place new orders for stock. 11

12 Indeed, mobile and social both offer exciting opportunities for brands to engage with today s digitally-savvy customers on a new level. Research shows 78 percent of customers believe social media will become the next tier of customer service (Maritz Research 2012). Mobile is already proving to be an effective driver in attaining brand loyalty and affinity. Smart organisations have recognised this and are including mobile in their loyalty strategies. One such company is Myer. Members of the MyerOne program can have their smartphones scanned at the register in place of their membership card, and use the MyerOne app to access full membership information such as shopping credit balance, tier status and rewards. They can also receive exclusive offers sent directly to their phone. There are different ways for organisations to engage with their consumers and a mobile app might not be the right choice for every brand. But it is important for companies to tap into the channels that reach and engage consumers in order to add value. 3.4 Deliver again and again and again. Relationships are about exceptional experiences every time, so brands need to make every experience count. Are you building experiences that will last? Or are they just for now? Too many companies focus on either acquisition and retention (which is often too late), or immediate sales. There are good reasons for this; such campaigns are easy to target, have obvious starting points and clear metrics to report back to senior management. On the other hand, building long-term relationships takes a great deal more understanding with softer measures that take time to gather. The rewards are long term but can be more difficult to prove. Customer acquisition is important, but ensuring superior experience and delighting existing customers is the key in building loyalty. Delivering a consistent experience is a new and vital challenge for companies. It requires insight and dedicated design, an execution strategy that understands engagement throughout the customer lifecycle, unlocking data to inform more-intelligent interactions, and synchronising channels to deliver effective experiences. 12

13 4. The road to target How does a company drive customer loyalty? In our view, it is about delivering a branded, personalised, end-to-end experience across all touch points. An experience your customers value. For some companies, this requires a major transformation to become customercentric across all activities. For others, it may be a case of fine-tuning certain elements. An initial diagnostic to assess customer experience can be a great starting point to help any business understand its current performance from the outside in. Internal key measures may have been in place for some time and may no longer reflect customers expectations. A diagnostic can provide fresh and valuable insights. Similarly, a detailed multi-channel review provides companies with a thorough assessment of performance against best-in-class businesses. It can help set priorities for immediate actions and the basis for continuous improvement programs. 13

14 5. About Salmat Salmat helps clients take their customer experience to the next level. By viewing customer interactions from the outside in, Salmat s consultants can perform a tailored customer experience diagnostic to assess performance, measure customer effort, and identify both negative push factors and opportunities for greater value creation. To understand how Salmat can help you address individual customer needs and improve your customer experience, speak to a Salmat consultant or visit salmat.com.au for more information. Salmat is a unique Australian company, leading the industry in the provision of customer communication solutions. Through the strategic use of different communication mediums, including voice and non-voice channels, online technology, demographic insight and detailed data management, Salmat engages your consumers in cost-effective one-to-one communication - individually, in small groups or on a mass scale. Salmat SALMAT 14

15