Customer Experience Matters

Fortune Magazine asked 25 accomplished people about the best advice that they were ever given; it’s worth reading. I picked out 8 pieces of advice that I thought were particularly relevant to customer experience efforts. Here they are, with my comments:

1. “Focus on those things you do better than others.”
   Peter G. Peterson, Co-founder and Senior Chairman, Blackstone Group
   My take: You need to understand what makes your company special in the eyes of your customers; and it should show up in everything you do and every decision that you make. This fundamental premise is captured really well in a couple of older Harvard Business Review articles (that later became books): The Core Competence of the Corporation and  Customer Intimacy and Other Value Disciplines.
2. “Good story, but it’s hard to look smart with bad numbers.”
   Mark Hurd, Chairman and CEO, Hewlett-Packard
   My take: It’s hard to convince business leaders to make an investment in customer experience if you use bad or superficial numbers in your analysis. So spend time with the finance department and other internal financial analysts to make sure your business case is solid.
3. “Whatever anybody says or does, assume positive intent.”
   Indra Nooyi, Chairman and CEO, Pepsico
   My take: It’s official; I’m joining the Indra Nooyi fan club. This Fortune article and her description in TIme Magazine shows that she has a great sense of leadership. All too often, burdensome processes are put in place to keep customers from defrauding the company or to keep employees “in line.” Using Nooyi’s advice, you can simplify many processes by assuming that most customers are honest and that most employees want to do what’s right.
4. “If I waited for you to turn, you and the defensive player would have an equal chance to get the ball. Your opportunity is gone.”
   Eddie Lampert, Chairman and CEO, ESL Investments; Chairman, Sears Holdings
   My take: You need to think several steps ahead, like a chess player, in every strategy that you are considering; factoring in the response by customers and by competitors.  This reminds me of a quote from Wayne Gretsky when he was asked what made him a great hockey player: “Other people skate to where the puck is, and I skate to where it is going to be.”
5. “To thine own self be true.”
   Bob Iger, President and CEO, Walt Disney
   My take: This is a key message at a personal level, but it also has meaning for companies. Organizations need to continually foster their key purpose, or they will lose site of who they are. That’s clearly part of the problem that Starbucks is facing today. This advice is also useful when thinking about your marketing efforts; don’ t try and portray your company as something it’s not; that’ll just lead to empty promises.
6. “Get sales up, and keep expenses down.”
   Nelson Peltz, CEO, Trian Fund Management
   My take: Promoting customer experience for the sake of customer experience is not a sustainable approach.  At the end of the day, you need to make the clear economic case that customer experience efforts will improve business results. If not, they’ll get displaced by other initiatives that have a clear economic benefit.
7. “Spend a ton of time with your customers. Especially when you’re new, the first thing you should do is go out to customers and ask them how you compare with competitors, how your service is, what they think of your products.”
   Charlene Begley, President and CEO, GE Enterprise Solutions
   My take: There’s nothing more powerful or aligning than clearly hearing the voice of the customer. All too often people put their own spin on what customers need or want, so it’s important that you hear what customers are saying in their own voices. But don’t listen though a starry-eyed lens, make sure you hear the reality of the situation. As I learned from Jack Welch: “Deal with the world as it is, not how you’d like it to be.”
8. “Have a point of view about the future that focuses on the customer.”
   Alan Mulally, President and CEO, Ford Motor Company
   My take: While companies often have visions, many aren’t in the right form. Start with a picture of where your customers will be and make sure that your vision is described through their eyes. If you can’t articulate what customers you’ll serve and describe what they’ll want, then you can’t hope for anything more than an empty vision.

The bottom line: When it comes to good advice, borrowing is a virtue.

Our local Shaw’s Supermarket is undergoing a major renovation. It’s a mess. There are signs of construction everywhere, aisles are being moved around, and there’s a shortage of inventory. The environment is ripe with potentially horrible customer experiences.

But Shaw’s is doing something about it. The supermarket has roving employees asking if they can help shoppers. One of them came up to me when I was looking for a specific cereal that I couldn’t find. He tried to find the cereal (even going into the stockroom), but they didn’t have it. He apologized and gave me a $1 coupon for my troubles.

Here’s what Shaw’s did right with that experience:

• Anticipated unavoidable customer experience problems.
• Proactively minimized the negative impact on customers.
• Empowered employees with easy-to-use service recovery options.

In an earlier post, I introduced “CARES“ as a benchmark for good customer service. Let’s evaluate this experience using that model:

• Communication: B-
  The employee was very clear about what he was going to do. It would have been even better if the supermarket had signs up that apologized for the situation and let shoppers know that some employees were roving around trying to help. They might even provide these employees with special “customer service” smocks or something to make their efforts more transparent.
• Accountability: A
  The employee didn’t just point me to where the cereal might be, he went around and looked for it; clearly taking ownership of my problem.
• Responsiveness: A
  The employee came up to me and asked if I needed help and then provided me with a coupon even though I did not complain (I found another cereal).
• Empathy: A
  The employee was very caring in his communications with me (although the situation wasn’t so bad that I needed a lot of empathy).
• Solution: B+ 
  While I didn’t get the cereal that I was looking for (which would have earned the “A”), I found out quickly that they didn’t have it. And the $1 coupon made the solution work well for me.

The bottom line: Avoiding horrible experiences is often more important than creating great ones.

There was an article in the Boston Globe this week called “Feedback, even if it hurts” which talked about how companies like Bank Of America are allowing customers to provide feedback on their Web sites. So I decided to go take a look at Bank Of America’s customer feedback. Here’s what I found:

As you can see, 95% of people would recommend the BofA’s online banking, 85% would recommend its Bill Pay, 94% would recommend its mortgages, and 67% would recommend its mobile banking. And all of those products received more than 4 stars (in a five star rating).

That feedback was much more positive than what I expected given that banks didn’t fare so well in Forrester’s Customer Experience Index which ranked Bank Of America 91st out of 112 firms. So I looked at what consumers had to say about Bank of America on the Epinions site. It turns out that Bank of America came out with a rating of 2 out of 5 stars:

Hmmmm….  These are clearly two different sets of feedback: One positive, and one not so positive. What’s happening here?!?!?

My take: Let me start by saying that I have no reason to believe that Bank Of America is doing anything to alter the scores on their site. I think that there’s merit in what a spokesperson for Bank of America said about the difference between feedback sites:

There are many other sites that allow product ratings of our products but those sites can not guarantee those customers are even Bank of America customers. We guarantee these are truly Bank of America customers since we validate which accounts they own, which is something the other rating sites cannot promise.

It’s likely that the need for customer authentication on the Bank of America site has some influence on the types of comments that are being left. People tend to be freer with their comments when they can stay anonymous. In any case, it’s clear that companies need to look at feedback on their own sites as well as feedback from other sources.

A word of caution: Getting access to feedback is only one part of a voice of the customer (VoC) program. Companies often spend the bulk of their time/effort trying to get the feedback, and not nearly enough time figuring out what to do with it.  That’s why good VoC programs are built around LIRMing, which means they have a formalized approach to Listening, Interpreting, Reacting, and Monitoring. 

The bottom line: Allowing customers to post comments does not constitute listening to the voice of the customer.

Time Magazine published its fifth annual list of the world’s 100 most influential people. So I decided to take a look at that list from two angles: popularity and inspiration.

Entertainers Win The Popularity Contest

As part of the story, Time let readers vote on who should be on the list. Here are the five people who received the highest ratings (with my commentary):

1. Shigeru Miyamoto (video game designer; creator of the Nintendo Wii).
   My take: Video gaming is now a mainstream activity; we’ll see it continue to boom and show up in different places in our lives.
2. Rain (25 year old Korean pop sensation)
   My take: A lot of Koreans must read Time’s Website; I’ve never heard of him.
3. Stephen Colbert (Comedian, host of The Colbert Report)
   My take: Even in the face of global unrest, people still like to laugh (I am a huge fan of Colbert).
4. Heidi Klum (Supermodel, host of Project Runway, and married to the singer Seal)
   My take: Project Runway is an incredibly creative and entertaining show. Or, as its many fans might call it, “Fierce!”
5. Tyra Banks (Talk-show host, America’s Next Top Model mentor).
   My take: There will always be things in life that I just don’t understand.

The Best Stories Are Both Influential And Inspirational

The list of 100 people, which covered 5 categories, contained people who I would classify as both good and bad. I picked one person from each category that I felt provided a good story. 

• Leaders & Revolutionaries: Dalai Lama. He remains calm and nonviolent even while fighting against China’s oppression of his people. There’s a lot to learn from a couple of his quotes in the article: “We <the human race> are the superior species on Earth but also the biggest troublemakers,” and “I don’t dislike the Chinese, only their actions.”
• Heroes & Pioneers: Madeeha Hasan Odhaib. She built a business in Iraq sewing hospital sheets and flags and she now employs 100 women. While she might not have the most powerful resume on the list, I think she demonstrates how the world can become a much better place if everyone finds a way to make (even a small) difference.
• Scientists & Thinkers: Larry Brilliant. As part of the World Health Organization, Brilliant was a key player in the eradication of smallpox. He has been appointed to lead Google.org, the philanthropic arm of Google. This move by Google is an example of an important trend called “The responsible company: Performing with purpose is the new challenge” that I highlighted from The Economist.
• Artists & Entertainers: Miley Cyrus. Cyrus (a.ka. Hannah Montana) has a cult following (which includes my daughter with whom I went to see Cyrus in concert). What I like about Cyrus is her apparent good values; on and off the screen. While she’s taken a hit lately with some Vanity Fair photos, it’s critical for the entertainment industry to provide good role models. Hopefully she won’t turn into a disappointment like the Spears sisters (Jamie Lynn and Britney).
• Builders & Titans: Indra Nooyi. As chairman and CEO of PepsiCo, Nooyi has been leading the company towards sustainability and social responsibility. As an example, she led the company’s move to healthier products; removing trans fats well before competitors. Here’s how Howard Schultz who authored Nooyi’s description described her management style: She welcomes hearing from people who disagree with her, but she is single-minded about following the path she believes is best for her company and its shareholders.

The bottom line: When it comes to getting the popular vote, entertainment rocks. But nothing beats a good inspirational story.

I’ve written posts that have chided marketing campaigns from JP Morgan Chase, Circuit City, and John Hancock because they appear to be disconnected from the reality of how the firms treat their customers. Those myopic marketing efforts fail to meet a fundamental tenet of Experience-Based Differentiation: Reinforce the brand with every interaction, not just communications.

I even developed this diagram to show how these marketing campaigns can lead to empty promises:

Probability Of Success For Branding Efforts

Given my recent negativity towards marketing campaigns, I was thrilled to read about JetBlue’s “Happy Jetting” initiative. I call it an “initiative” because it’s more than just an external marketing campaign. Here’s some of what Andrea Spiegel, JetBlue’s VP-Marketing, had to say about “Happy Jetting” in an Advertising Age article:

This is much more than just an ad campaign, it’s a brand campaign because it speaks to what the core of JetBlue is. It’s executable across every touch point for crew members and customers. [It's also] the most integrated internally and externally. We’ve brought to life this new world of jetting internally for crew members through training programs, screensavers and posters all over the company.

Now that’s what Experience-Based Differentiation is all about!

The bottom line: Don’t push ad campaigns, embrace brand initiatives.

As any regular reader of this blog knows, my research focuses on a concept called Experience-Based Differentiation (EBD). A key principle of EBD is to Treat customer experience as a competence, not a function. To achieve this principle, companies need to infuse customer-centric DNA into their culture. But this level of change requires a high degree of commitment from the senior executive team. I think this quote from Mario Andretti explains why:

Desire is the key to motivation, but it’s determination and commitment to an unrelenting pursuit of your goal - a commitment to excellence - that will enable you to attain the success you seek.

In a previous post I discussed how companies with customer experience leaders are progressing faster than other firms. The creation of that type of role can be a sign of commitment, but the president or CEO and all of her/his direct reports must demonstrates an ongoing commitment in order to change the culture.

My sense is that senior executives are intrigued with customer experience, but most are not yet fully committed to it.

8 Signs Of Executive Commitment

If a senior executive team is fully committed to customer-centricity, then it can answer yes to all of the following questions:

1. Do senior executive staff meetings have a recurring agenda item on customer experience? (this does not include dealing with customer emergencies)
2. Do internal communications from the CEO/President regularly include discussions of customer experience?
3. Do external communications from the CEO/President regularly include discussions of customer experience?
4. Is customer experience explicitly discussed (in some form) within the company’s strategic plan(s)?
5. Does the executive team have a clear set of customer experience objectives?
6. Do most of the executive team members have goals based on customer experience objectives?
7. Is the compensation of executive team members tied to customer experience objectives?
8. Does the organization believe that the CEO/President would trade-off some short-term financial results for longer-term customer experience gains?

The bottom line: Senior execs with less than full commitment need to be committed.

Okay, your customers aren’t really Martians (unless, maybe, if you work for a space agency). But they might as well be. I’ve started to use the metaphor that “companies are from Venus and customers are from Mars:”

The gender gap is nothing compared with the company-customer gap. These entities have completely different motivations and conceptual frameworks. Without a disciplined approach to customer experience, people have a stong bias towards developing experiences from the left to the right, pushing Venus perspectives on Martian customers. The result: a plethora of gaps between what customers expect and what companies deliver.

The bottom line: Improve customer experience by developing the right (to left) discipline.

Here’s the summary from a report called Eight Steps For Keeping Customer Experience Momentum During An Economic Downturn, which looked at responses from a recently fielded survey:

While most of the companies have lowered their financial outlooks, only a few felt that customer experience would become less important. However, if they do need to cut costs, companies ranked design agency services and focus groups high on the list of activities that might get trimmed back. In this environment, customer experience execs need to prepare for tightened budgets, intensified focus on costs, and customer dissatisfaction.

And here’s some data that I found to be most interesting:

• 69% of respondents say their firms want to differentiate their customer experience from competitors while only 10% were willing to lag behind.
• 42% of the respondents who said that the economy was changing their firm’s outlook felt that customer experience would become even more important, and only 15% felt that it would become less important.
• 35% of respondents say that customer experience spending will get cut at a lower level than other efforts, and only 10% expect that it would get cut at a higher rate.

In case you’re interested, here are the eight steps that I outlined (also look at this post: Lead Your Company Out Of A Downturn):

1. Keep an eye on the customer.
2. Prioritize key moments of truth.
3. Avoid across-the-board cuts.
4. Aggressively seek usability improvements.
5. Focus on small-scale cultural change.
6. Communicate, communicate, communicate.
7. Don’t give up on innovation.
8. Gauge the CEO’s appetite for customer experience.

The bottom line: If the economy goes bad, your customer experience doesn’t need to follow.

In a recent post, I discussed research that showed a strong correlation between customer experience and loyalty. While the correlation was strong across all 9 industres in the study (banks, credit card issuers, health plans, insurers, Internet service providers, investment firms, TV service providers, retailers, and wireless carriers), the level differed across the 112 companies we examined.

Let’s take a look at the firms whose customers showed the strongest and the weakest correlation between customer experience and both measures of loyalty that we used:

• Likelihood not to switch away from provider 
  • Strongest correlation: Cablevision (TV), Nextel, AOL, Bank Of America, and Quest
  • Weakest correlation: Vanguard, Gap, E*TRADE, TD Ameritrade, SunTrust Bank
• Willingness to consider provider for another purchase
  • Strongest correlation: Fifth Third Bank, Farmer’s Insurance, AIG, Merrill Lynch, and Cablevision (TV)
  • Weakest correlation: Edward Jones, Highmark, credit unions, Blue Shield of California, and Medicare

Many people have asked me about what drives the differences across firms; which can sometimes be large even for firms within the same industry. I think that the key drivers are a combination of industry and company dynamics.

• Industry dynamics. Some of the differences are based on the structure of an industry.
  • The ease of switching providers (it’s much easier to switch retailers than health plans)
  • The range of customer experience options (if there aren’t any firms with better customer experience, then why not stay where you are)
  • The level of product/service differentiation (if the product/service features are highly differentiated, then the customer experience is less important) 
  • Customer experience reputation (if an industry gets known for delivering either good or bad experience, then customers become more acutely aware of it)
• Company dynamics. Some of the differences are based on how companies go to market.
  • Customer demographics (the makeup of a firm’s customer base will contribute to the correlation. Firms with older consumers, for instance, will likely have lower correlations)
  • The level of product/service differentiation (if a company’s product/service features are highly differentiated relative to their competitors, then the customer experience for that firm is less important)
  • Customer experience differentiation (firms that raise awareness of customer experience in their marketing will likely increase the correlation)
  • Customer experience deficiencies (if a company provides very poor customer experiences, then customers who care the most may have already left)

The bottom line: How important is customer experience to your firm?

In a recent research report called Customer Experience Thrives With Executive Leadership, I examined data from 287 large US firms in our customer experience panel. Almost half (45%) had an executive in charge of customer experience across products and channels; a role that I refer to as a chief customer/experience officer (CC/EO). Here’s a summary of what I found when comparing responses from the firms with a CC/EO to those without one:

Firms with these leaders view customer experience as more important, have more enterprisewide customer experience efforts, report having fewer obstacles, do more primary customer research, and score better in all three areas of Experience-Based Differentiation.

When it came to the Experience-Based Differentiation (EBD) self-test, here’s how many firms ended up with a rating of either “excellent” or “good” for each of the three principles of EBD:

1. Obsess about customer needs, not product features
   With CC/EO: 39%
   Without CC/EO: 24%
2. Reinforce brands with every interaction, not just communications
   With CC/EO: 46%
   Without CC/EO: 30%
3. Treat customer experience as a competence, not a function
   With CC/EO: 42%
   Without CC/EO: 24% 

The bottom line: A CC/EO can help turn customer experience into a competency. 

Have you ever heard of VF Corporation? Well, I hadn’t heard of the company until I read an article in Fortune magazine called How a 100-year-old apparel firm changed course. It turns out that VF owns a bunch of familiar brands like Vans, Lee, Wrangler, Nautica, Eastpak, Reef, and The North Face. The article talks about how VF converted its strategy to focus on “lifestyle brands” that appeal to consumers’ desires for fashion and status.

While discussing how the company shifted its strategy, Mackey McDonald, Chairman of VF Corp, provided this fantastic insight:

We realized we didn’t have to come up with brilliant ideas - we needed brilliant ways of executing good ideas.

My take: Very well said! I expect to be repeating this quote a lot in the future. It captures two concepts that I think are important:

1. You often get the most bang from your buck (or ROI on your effort) if you figure out what is “good enough.” (The 80/20 rule)
2. You should focus your efforts on things that you can actually implement.

The bottom line: Hopefully you found this post to be good, or at least brilliant.

I just read a BrandWeek article called Ford Asks Employees, Dealers to Spread Ad Message that talks about Ford’s new campaign called “Drive one” which includes a push for employees and dealers to spread the word. Jim Farley group vp-marketing and communications for Ford explains it this way:

The whole idea behind this campaign is not fancy ads. It’s talking to the customer, who talks to a friend. It’s the only chance we have to break the apathy.

My take: As I talked about in my previous post about John Hancock, advertising alone can’t dramatically change a company’s positioning. It takes a shift in how you interact with customers. That means you need to get employees involved (and for car makers, it means dealers as well). So this approach makes absolute sense. Yet, something is wrong.

The fact that Ford is making such a big deal out of this approach means that it’s an unusual occurance. So the car maker does NOT regularly engage employees and dealers in its advertising efforts. That’s a problem. Employees and the entire front line need to be developed into ambassadors for any campaign. And if they can’t promote it, then that’s probably a good sign that the campaign is not a good one. 

When I interviewed the CMO for JetBlue several years ago, she told me that she spent half of her time communicating the brand message internally. Sounds like a good benchmark.

The bottom line: CMOs need to become CMMOs, Chief Marketing And Motivational Officers.

John Hancock announced a new ad campaign called “Cursor” that showcases two areas: the rise of digital communications and the opportunity for financial success. It is trying to reintroduce the company to the public as a relevant and inspirational brand. Here’s how Jim Bacharach, vp-advertising at John Hancock described the campaign:

The thinking behind the campaign was to recognize where consumer sentiment is today. The unstable economy is a source of anxiety for a lot of folks. One of the key differences from what we’ve done in the past is that today, more than ever, these conversations take place through electronic media.

My take: Right below is the John Hancock homepage (from earlier this week). Other than the discussion of the new “Cursor” ad campaign in the lower right, is there anything about this page that reinforces the notion of relevance, inspiration, or digital conversations?

I didn’t bring this up to pick on John Hancock’s Website or even to discuss its repositioning efforts. Instead, I wanted to (re)make a point that advertising alone can not reposition a company.

While ad campaigns can certainly introduce new brand promises, repositioning can only occur of the company actually keeps those promises during all of its interactions. That’s why the second principle of Experience-Based Differentiation is: Reinforce the brand in every interaction, not just communications.

Without designing all touchpoints to fulfill the new brand promises, the hope for repositioning is likely to just lead to empty promises:

Probability Of Success For Branding Efforts

The bottom line: Don’t waste your marketing dollars on empty promises.

Bank Of America and the MIT Media Lab announced the creation of the Center For Future Banking. BofA has committed $3 to $5 million per year to the effort. Here’s some of the questions the research plans to address:

• How can every customer be empowered with the knowledge and tools to take better control of their financial futures?
• How will banking interactions evolve as a customer’s physical and virtual worlds become completely intertwined?
• How will social networks and mobile platforms transform customers’ banking experiences, making it easier, more convenient, and better integrated with their daily lives? 

My take: I applaud the move. In my research report called The Financial Services Survival Guide from July, 2006, I highlighted the need for large-scale change in the industry. In particular, I defined five new skills that needed to be developed across the industry. Here’s the executive summary from that report:

Forrester’s customer advocacy rankings show that retail financial services firms aren’t meeting the current needs of customers. What’s causing the problem? Organizational silos. But Forrester sees an end to this status quo. The changing needs of customers, increasing competitive pressure, and emerging technology capabilities will push leading firms to break down their internal silos and create innovative new products and services.

Here are the technologies that I highlighted in that report:

Here’s an overview of the five new skills that I outlined:

• Skill No. 1: Customer-centric DNA. Every company can meet customer needs some of the time. But to consistently deliver great experiences, firms need a deep-seated, companywide focus on customers. Rather than customer relationship management efforts that often focus narrowly on data warehouses and technology, firms should master customer-centric DNA, which consists of two elements: customer familiarity and organizational engagement.
• Skill No. 2: Solution management. Today, firms develop new offerings for customers by tweaking the features of specific products, such as a new interest rate for a savings account, a different affinity group for a credit card, or a lowered price for trading in a brokerage account. But these product-centric efforts miss the opportunity to meet the financial needs of customers who cross the boundaries of a single product.
• Skill No. 3: Cross-channel process agility. Customers want what they want - when and where they want it. A consumer may check mortgage rates online, verify terms over the phone, and then go into a branch to fill out the paperwork. While customers regularly cross over channels, many firms design their retail delivery models one channel at a time. To meet the needs of consumers, firms need to provide a seamless experience across channels using a skill that we call cross-channel process agility.
• Skill No. 4: Integrated merchandising. In many financial institutions, marketing efforts are heavily focused on new customer acquisition. But firms are recognizing the importance of selling into their current base of customers as well. That’s why so many firms are now pushing products at customers - in the name of “cross-selling.” Rather than throwing products at customers, firms need to develop an integrated merchandising strategy that puts the right offering in front of the right customer, at the right time.
• Skill No. 5: Interactive education. Let’s face it, financial services are complicated. How many consumers fully understand the difference between a variable and fixed-price mortgage, a Roth and a traditional IRA, or an ETF and a variable annuity? Rather than crafting marketing communications to push consumers through buying cycles, firms need to provide interactive education - information and tools that help consumers make good financial decisions.

The bottom line: The future of banking ain’t what it used to be.

I can’t believe it, but this is my 150th post. So let me start with a big thank you to everyone who has been reading, linking to, writing about, and passing along my blog…

As I’ve been doing for every 50th post, I’ll mark this milestone with a retrospective of my last 50 entries. So here’s a look back at the major themes in those posts:

• Customer experience links to business results. In what (I think) is one of my most impactful pieces of research, I showed the direct connection between customer experience and business results in nine industries that I studied. It turns out that customer experience is highly correlated with customers’ intentions to switch and their willingness to purchase additional products. In an upcoming post, I’ll talk about why correlation levels differ across industries and companies.
• Customer service opportunities abound. First of all, I rebutted an article in Time Magazine saying that self-service will replace customer service. It turns out that consumers still want to interact with other people. As a matter of fact, customer service is so important that I introduced a new model called ”CARES” for evaluating it. To understand customer service breakdowns, I showed the six gaps between interntions and reality. I also had posts that talked about specific companies: A note to Comcast’s investors about the firm’s poor service; a call to Circuit City’s board of directors to improve the retailer’s experience; a shout out for USAA taking Business Week’s top spot; and an evaluation of American Airlines’ response to grounding passengers.
• Branding takes more than ad campaigns. Several posts referred back to the second principle of Experience-Based Differentiation (EBD): Reinforce the brand with every interaction, not just communications. Too many companies think they can just advertise their way to a new competitive positioning. Given that key element of EBD, I gave advice to Sears about shedding its customers; Victoria’s Secret about being too sexy; and Miller beer to be more genuine. One of the clearest posts on this topic came a little bit earlier when I told Chase that it can’t advertise its way to friendliness.
• Online practices: The good and not so good.  Several posts looked at different angles of online strategies. I pointed to GapMinder as a great rich Internet experience. I also discussed how Hulu.com demonstrates good Gen Y design. I even took a look at announcements from Jay-Z, MySpace, and iTunes. But the Web doesn’t operate in isolation, so I passed along some of my research on Web-to-store experiences. Of course, not all Web efforts make sense; which is why I couldn’t blindly endorse Starbucks’ Web 2.0 activities. My favorite post about online efforts incorporates a MUST SEE video with a great rap song on Web usability.
• Innovation is a critical non-strategy. First of all, I think innovation is absolutely critical. That’s why I discussed how to use the five disruptive customer experience strategies as a source of innovation. But it is not a strategy on it’s own; which is why I agreed with an article in Advertising Age that said innovation is a tactic, not a strategy. I also highlighted interesting elements of Honda’s innovation process and Apple’s design process. You might also want to take a look at this older post as well: Trend Watch #4: Business Week “Innovation Predictions 2008.”
• Some firms are better than others (a.k.a. rankings). I examined consumers feedback on 112 firms to showcase ratings in a number of areas. The posts highlighed that Credit Unions and Bordrs are the easiest to work with; Costco and Sam’s Club are the most useful; Borders and Old Navy are the most enjoyable; credit unions have the most loyal customers; USAA and Schwab have the highest Web satisfaction; Citizens and Barnes & Nobles have the highest store/branch satisfaction; and USAA and The Hartford have the highest phone satisfaction. RBC was on the top of 22 frims in the Canadian Customer Experience Index.
• Management “wisdom” comes in different shapes and sizes. I continue to examine one of my favorite topics, the role of leadership. Kenneth Chanault (Amex CEO) used a quote from Napoleon that I really liked: “The role of the leader is to define reality and give hope.” In response to a Chrystler ad that said it cared about customers, I recommended that their executive team focus on Experience-Based Differentiation. The post called Starbucks Searches For Its Soul remindes exec that they need to retain a sense of purpose. And, in the face of an economic downturn, I commented on an article in Fortune Magazine about leading your company out of a downturn. Last, but not least, I shared a quote from one of my favorite characters, Morpheus.
• We’re a long way from customer experience excellence. To begin with, I defined the perfect customer experience as “a set of interactions that consistently exceed the needs and expectations of a customer.” In a number of posts, I looked at how companies are approaching this customer experience nirvana. In Obstacles To Customer Experience Success, I described that more companies have senior customer experience execs, but most still lack discipline. In Customer Experience Maturity — Not!, I showcased results from 287 execs that took the Experience-Based Differentiation self-test (most firms failed all areas of EBD).
• A number of miscellaneous tidbits. I made recommendations to a number of companies and industries: health plans need better member experiences, American Airlines should rebuild confidence with customers and employees, Citigroup has a the chance to improve its credit card business, banks need a Gen Y overhaul. I also had a couple of off-topic posts on sporting events: my superbowl observations and opening day at Fenway Park.

If you want to get completely caught up on my blog, also take a look at these previous “Best Of CxP Matters” posts:

• The Best Of Customer Experience Matters, Volume #1 (provides highlights of my first 50 posts). 
• The Best Of Customer Experience Matters, Volume #2 (provides highlights of my second 50 posts).

The bottom line: If you enjoyed the first 150 posts, keep reading and tell your friends about this blog.

I’ll bet you’re wondering where this post is heading. But it’s probably not going where you thought it might be going…

The Service Employees International Union (SEIU) and the League of Young Voters sponsored a “Keep It In Your Pants” contest for all ages of students (middle school through grad school) to create a public service announcement about the threat that “Debt Disease” poses to American consumers. The winner receives $5,000.

Here’s what Stephen Lerner, SEIU Assistant to the President and Director of the Private Equity Project had to say about the contest:

Credit card debt can ruin your life, spreading and growing like a disease. We’re warning young people of the dangers of ‘Debt Disease’-and urging them to protect themselves the same way they would against any other dangerous and contagious social epidemic.

Here’s my favorite video of the five finalists:

The bottom line: As the old saying almost goes: “Better save than sorry.”

I was a speaker at Microsoft’s Health Plan Executive Forum in Jacksonville, Florida last week. As you might expect, I talked about customer experience.

Dennis Schmuland, MD, Microsoft’s Health Plan Industry Director kicked off the morning with a video that showed how current and planned Microsoft technologies would revolutionize the healthcare experience — for both patients and providers. It was pretty cool; like something from a Sci-Fi movie. You can see the video posted on Microsoft’s HealthBlog.

Next up was Anthony Nowlan, Chief Medical Officer, CentriHealth, Inc., and former Director of the NHS Information Authority. He gave a great speech called “Organizing Health Care in the Information Age.” He started by walking through the history of healthcare starting in the 1800s. It turns out that one of the key problems that we have today is that our current institutions (hospitals, labs, etc) were created in a period where the primary issue was acute care. As Dr Nolan said, “patients came in, got treated, and then they either got better or died.” But in today’s environment, the majority of costs come from chronic care. And you can’t solve the current problem with the old institutions; consumers need to be more involved. So his speech focused on how to use electronic health records to reorganize the healthcare system.

My speech was titled “Health Plan Member Experience: From Enraged To Engaged.” I borrowed some material from Liz Boehm (one of Forrester’s healthcare analysts) to show that member experience was becoming more important for health plans. One of the reasons is that cost containment for chronic care requires some behaviorial changes. But consumers don’t trust health plans for basic interactions, never mind listen to their wellness and disease management recommendations.

I then showed some of my research on customer experience, loyalty, and satisfaction. Here’s a small snapshot of that information:

• Health plans came in last place out of 9 industries in our Customer Experience Rankings; and were also lowest in each of the individual areas: useful, usable, and enjoyable.
• The highest rated plan in the rankings, Kaiser, only ended up 75th out of the 112 firms we examined.
• 40 year-olds give health plans the lowest customer experience ratings.
• Seniors give health plans the highest customer experience ratings.
• Health plans have the lowest rating for satisfaction with online interactions and virtually tied for last place in satisfaction with phone interactions.

Of course, I couldn’t leave the attendees without a path to follow. So I explained how they could use Experience-Based Differentiation as their blueprint for improving customer experience.

After the presentation, one of the participants asked a good question: “Can we (health plans) ever have satisfied members, since we need to reject many of their claims?” My answer was “You can absolutely raise satisfaction levels. While you may never be as enjoyable as Borders, there’s no reason for interactions with health plans to be any less useful or usable than with any other industry.”

The bottom line: Health plan member experience is a chronic problem, but it’s curable.

(P.S. I don’t generally write about my work with specific clients, but Microsoft approved this blog post)

In a recent post, I introduced “ACES” an an acronym for the elements of great customer service (and, by the way, customer experience is NOT disappearing). Based on feedback to that post (thanks Justin), I’ve decided to specifically add “responsiveness” to the mix, instead of considering responsiveness within other items (which is what I was doing in ACES). So there’s now an “R’ in the new and improved acronym “CARES“ which stands for:

• Communication (clearly communicate the process and set expectations)
• Accountability (take responsibility for fixing the problem or getting an answer)
• Responsiveness (don’t make the customer wait for your communication or a solution)
• Empathy (acknowledge the impact that the situation has on the customer)
• Solution (at the end of the day, make sure to solve the issue or answer the question)

The bottom line: Your customers should think that your company CARES.

Yesterday’s USA Today provided a double-header for my blogging. In addition to the ad from AA pilots, there was also a full-page ad from Chrysler that started as follows:

Quality is one of those fluffy words. After you see it or hear it enough times, it doesn’t mean anything anymore

The ad announced that the auto maker had created a Chief Customer Officer position and that it aims to put the customer first, which it described as a “basic rule of corporate etiquette.”

My take: The beginning of the Chrysler ad reminded me of My Manifesto: Great Customer Experience Is Free. In that post, I discussed how customer experience is a lot like quality. So, hopefully, Chrysler execs are reading my blog and/or research.

If they are reading this blog, then I suggest that they also follow my advice about how to successfully implement the role of Chief Customer Officer. That research outlined five broad areas of focus: 1) Make sure that you’ve got the right environment; 2) Prepare to take on a broad change agenda; 3) Establish a strong operating structure; 4) Kick off high-priority activities; 5) Look ahead to the future.

But the presence of a Chief Customer Officer does not immediately convert Chrysler to the customer experience sect. The entire executive team needs to learn, internalize, and dedicate themselves to a new set of sacred rituals. What text can they use for guidance and inspiration? You guessed it: Experience-Based Differentiation (EBD). EBD is a blueprint to customer loyalty that builds upon three principles:

1. Obsess about customer needs, not product features
2. Reinforce the brand with every interaction, not just communications
3. Treat customer experience as a competency, not a function.

As a start to the conversion process, the executive team should take the EBD self-test and use the results as a basis for discussing where to invest their time and energy.

The bottom line: You can’t convert to the customer experience religion by proclamation; you need to dedicate your professional life to it.

My previous post discussed American Airline’s Web response to the grounding of its planes. But the airline’s problems go beyond maintenance issues with the FAA. While I was sitting on an AA flight today, I read something amazing in USA Today. The Allied Pilots Association (representing American Airline’s 12,000 pilots) had a large ad that was titled “Why is American Airlines Failing Its Customers?” Here’s an excerpt from the ad:

We’re embarrassed that so many passengers are inconvenienced and dissatisfied and hope you’ll accept our apologies for our airline’s unreliability. Why is American Airlines failing its customers?

Due to mismanagement, our airline doesn’t have enough workers to run dependably. It also doesn’t keep enough spare parts to ensure prompt repairs — and with the industry’s second-oldest fleet, the need for repairs is more and more frequent. American Airlines needs to reinvest in our airline, and do so quickly.

My take: This is even worse news than the groundings. When a major part of your workforce resorts to advertisements to tell management about the root of customer dissatisfaction, you’ve got a very serious problem. And, it’s not just the pilots that feel this way. I asked several AA employees that I ran into about the ad. While most did not want to speak badly about their company, it was clear from their responses (and sometimes, non-responses) that many AA employees agree with the pilots.

If the AA leadership team (execs and board of directors) have not yet gotten the message, then hopefully this is their wakeup call. As a frequent flier on AA, I hope that the company treats this as its “low moment” and commits itself to rebuilding trust with employees and customers.

The bottom line: It’s hard to excite investors when you irritate customers and employees.

American Airlines cancelled almost 600 flights today which brings the total to more than 3,000 cancellations this week. The result: 100s of thousands of stranded travellers. That’s a lot of inconvenienced customers. For many of them, the cancellations represent a major problem; keeping them from important business trips, vacations, and family visits.

So how well did American Airlines respond to its customers’ problems? Rather than trying to dissect American’s entire response, I took a look at how the firm handled the situation on its Web site.

On the top of the American Airlines’ Website homepage there is a clear red link: “ADVISORY: AIRCRAFT INSPECTIONS AFFECT SOME AA TRAVEL.” Here’s where the link led to:

Click icon to see the entire page

My take: As I’ve discussed in the past, good customer service has four components (which I’ve dubbed ACES): Accountability (take responsibility for fixing the problem); Communication (clearly communicate the process and set expectations); Empathy (acknowledge the impact that the situation has on the customer; and Solution (at the end of the day, make sure to solve the problem)

Here’s how I’d grade American Airlines across the ACES:

• Accountability: C-
  While the page starts out by saying “We are sorry about inconveniencing you…,” nothing on the rest of the page suggests that American Airlines is taking full responsibility for the situation. There’s no statement saying that they are committed to trying to fix the problem.
• Communication: C-
  The airline gets credit for putting a prominent link on its homepage. But it does not provide very clear picture of the process for customers to resolve their issues. There’s a link where consumers can send emails to ”request information about compensation,” but no statement about the timing or content of the response that they can expect. Also, the site does not make it clear what customers can expect when it says: ”Customers who were scheduled on a flight that was cancelled may request a full refund…” Does “request” mean that AA will give every inconvenienced traveler a full refund?
• Empathy: D
  There’s nothing on the page that acknowledges the potentially severe problems that this situation has caused for many customers. 
• Solution: D+
  At best, the airline is describing how travelers can get on another American Airlines flight.  But there’s no description about what they are going to do make up for the inconvenience. Also, the airline has limited their solution for travelers who booked after April 8th and insists that everyone must begin travel by April 17th.

Overall Grade: D+

The bottom line: You may not be able to avoid all problems, but you can certainly control how you respond.

I was reading USA Today yesterday and ran across an interview with American Express CEO Kenneth Chenault. I really enjoyed his response when asked to characterize leaders who do well:

The best definition of leadership to me is summed up in a quote: “The role of the leader is to define reality and give hope” - by Napoleon.

(No need to harass Chenault about his management style, he goes on to say that he does not want to end up like Napoleon).

My take: You may not like what Napoleon did, but it is hard to deny that he was a great leader. His quote really does define the essence of leadership. It nicely captures many of the characteristics that I think are critical for good leaders:

• Deal with the reality of the world. I’ve always loved Jack Welch’s quote: “Deal with the world as it is, not how you’d like it to be.” Many executives think they can impose their will on the rest of the world. Unfortunatley, this makes it very difficult for the people who work for them who must operate within the constraints of the real world.
• Engage your employees. Walt Disney really understood the importance of motivating the people in his organization. He captured it well in this quote: “You can design and create, and build the most wonderful place in the world. But it takes people to make the dream a reality.” 
• Provide a clear vision. Leaders are involved in only a small fraction of the decisions within their organizations. So they need to make sure that the myriad of other decisions will collectively drive the organization in the right direction. They can’t be wishy-washy. As Newark’s Mayor Booker said: “Life is about focus. What you focus on, you become. If you focus on nothing, you become nothing.” If people know where they are going, they are more likely to get there.
• Maintain a sense of purpose. It’s not good enough just to have a vision; leaders needs to make sure that their organizations have a strong sense of purpose. And it needs to be clear to their employees and customers. As Howard Shultz, founder and Chairman of Starbucks, has been quoted as saying: “Customers must recognize that you stand for something.“

The bottom line: While Napoleon’s quote is a great guidepost for leaders, I don’t condone adopting his practice of resolving conflicts with a coup d’état.

An article in Advertising Age called Is Miller Genuinely Daft? started off with the following sentence that I really liked:

Beer marketing 101: The most consistent brands fare best.

It turns out that Miller Genuine Draft is about to get its 8th tagline since 2001. The pitches have ranged from juvenile sexual humor to superior cold filtration brewing. During that timeframe, shipments have dropped 41%.

My take: As I’ve said many times, brands represent promises to customers. And firms need to deliver on those promises. If a company keeps changing its branding, then it can run into two major problems: 1) employees and distribution partners have a hard time internalizing and delivering on those promises; and 2) consumers get confused about what’s being promised.

It can become nearly impossible to deliver on a shifting set of promises. That was a key part of the message in my post Firms Need Some Soul Searching. 

The bottom line: Keep in mind that confusion is contagious.

Today is the Red Sox home opener at Fenway Park. For those of you who are not in or from the Boston area, then you might not understanding the significance: This is a local holiday. It’s up there with Thanksgiving, 4th of July, Memorial Day, and our own Patriots Day (which has nothing to do with our football team). This year it will be an even bigger deal than normal; they’re handing out the World Series Championship rings.

I went to my first Red Sox opening day game last year, it was a great experience. But I was sadly unable to get tickets for this year’s event.

Given all of the hoopla, it’s a good time to ask: Why is Fenway Park so popular?

There are actually a lot of good reasons to stay away from Fenway Park:

• It’s not cheap. The average cost for a family of 4 to go to Fenway Park is $320.71. It’s the most expensive park across Major League baseball and is nearly $130 above the national average of $191.75. 
• Tickets aren’t easy to get. Thousands/millions of avid fans turn on their computers on the morning of the designated days that Red Sox tickets go on sale. We sit in front of our computers all day waiting in the ”virtual waiting room” (VWR). Even after spending an entire day in the VWR, many people don’t get awarded the honor of buying tickets.
• The seats aren’t comfortable. In just about every area of the park you are treated to seats that were designed for very little people. The seats are narrow and the rows are right on top of each other. Don’t even think about putting down your soda or beer.
• The stadium is crowded. Many of the passageways at Fenway are narrow and can’t handle the foot traffic. Trying to go from the infield to the outfield on the first base side of the field is like trying to navigate through rush hour traffic on a Friday night. 
• The views aren’t great. The park is full of seats that have some sort of obstructed view; from the poles in the grandstand to the walkway traffic that bothers the first few rows in the expensive Loge boxes. But maybe my favorite obstruction is in the right field box seats. All of those seats are angled towards center field (not the batter), so you need to turn your head and look over thousands of people to see the game.

All of these issues turn out to be completely irrelevant. Fenway Park is not about comfort or convenience; it’s about leaving the real world behind and entering into a fantasy world where the only thing that matters is a Red Sox victory. All of the problems or distractions in your life seem to magically disappear when you walk into Fenway and are immediately engulfed in the rich tradition of Yaz, Ted Williams, and David Ortiz. I still feel like a little kid everytime I walk into the park and get a glimpse of the Green Monster (maybe that’s why the seats are so small).

I’ll miss opening day, but I’ll be there Friday night rooting against the Yankees. I was one of the lucky ones in the VWR. Go Sox!

The bottom line: Fenway Park is more like a magical Disney experience than it is a wonderful baseball stadium.

I recently published a report called How Consumers Research, Buy, And Get Service that looked at data from nearly 5,000 U.S. consumers. We asked consumers about the channels they use when researching, buying, and getting customer service. As part of the analysis, I compared the data to a survey that we did in late 2005. Here’s some of what we found:

• In-store satisfaction continues to dominate. In 2005, consumers were the most satisfied with in-store interactions for researching, buying, and getting service. The same is true in 2007. Satisfaction rates for in-store interactions also increased over the last two years, making the largest jump in customer service.
• Web site satisfaction increased, but only slightly for researching. Consumers were more satisfied with the Web for all three types of interactions in 2007 than they were in 2005. But the increase in satisfaction rates for research, was much lower than it was for buying or getting service.
• Email satisfaction is on the rise. For all three activities, consumers were considerably more satisfied in 2007 than they were in 2005. Satisfaction rates went up 10% for researching, 13% for buying, and 14% for getting customer service.
• Phone self-service remains a problem. In 2005, the satisfaction rates for phone self-service lagged behind most of the other channels. But the problem has actually gotten worse. While satisfaction rates have mostly increased for all channels over the last two years, consumers are actually slightly less satisfied with phone self-service for researching and buying.

The bottom line: Your front-line employees matter; treat them well.