GM’s New Formula: Quality + Customer Experience

This week General Motors announced that they were combining the leadership of the Product Quality and Customer Experience organizations into a single role, a first of its kind move for the auto industry. Alicia Boler-Davis will be GM’s Vice President for Global Quality and U.S. Customer Experience and her primary focus is on strengthening the experience in order to raise customer retention, which by GM’s calculation is worth $700 million for each percentage point increase. In addition to the merging of quality and customer experience, GM’s plan includes:

  • Dealership renovations so that the showroom enhances customer confidence and provides a strong first impression to car buyers
  • Support experts to handle the dealer and customer training required by the growing integration of technology into vehicles
  • A team to proactively handle social media monitoring and response
  • New programs to empower front-line sales and service personnel to resolve issues quickly

My take:  I applaud GM’s combination of quality and customer experience. In My Manifesto: Great Customer Experience is Free, I describe customer experience in terms of total quality.

Why does this combination make sense? Quality efforts tend to focus on removing waste and building more consistent processes, but they often lack the deep external perspective of customer needs and desires. The push for removing waste can also squeeze out some important design considerations and overly focus on short-term savings versus longer-term loyalty gains. Customer experience efforts can fill in those gaps and benefit from quality approaches for process redesign and control.

In the 2012 Temkin Experience Ratings, Chevrolet – the only GM brand in our ratings – lead the auto dealer segment and was the only one to receive a “good” customer experience rating. So the big auto maker has a solid base to work with. We’ll keep an eye on Boler-Davis’ progress.

The bottom line: Quality and CX are two great tastes that taste great together

Timeless Advice About Chief Customer Officers

It seems like there’s been a pickup of interest in the title of “Chief Customer Officer.” I’ve “studied” this role for a while and have worked with dozens of these execs (they often have a different “title”). Here’s my advice for companies that are considering this role that I published in 2007 in the post: Chief Customer Officer: To Do, Or Not To Do?

There’s a question that I’ve heard a lot that seems to stir up some debate: Do firms need a Chief Customer Officer? Well, I’ve run into zealots on both sides of the argument.

Those who say “absolutely yes” are convinced that companies can’t change without a senior executive who “owns” customer relationships, someone who can bring senior executive visibility to all of a company’s  customer-facing efforts. The argument is compelling — customers are certainly important enough to deserve a dedicated executive.

Those that say “absolutely not” are convinced that companies can’t just fix the problem by creating a new executive position.  They believe that this ends up being a superficial move — like putting lipstick on a pig. The argument is compelling — people often call for a new executive whenever they don’t know what else to do.

It’s an interesting dilemna when both sides of an argument are compelling. My position on this question is equally dogmatic: Absolutely yes and absolutely no.

To understand my position, let’s start by shifting the questin a bit. Instead of asking whether or not you need a person with the specific title of “Chief Customer Officer” let’s ask whether or not you need an executive in charge of a concerted effort to improve customer experience across the enterprise. If a company is truly committed to improving their customer experience, then an executive in charge of that change process will be very important. That person (who may or may not be called “Chief Customer Officer”) can lead a host of efforts like the establishing customer experience metrics and developing of a voice of the customer program.

But this type of position only makes sense if the CEO is truly committed to a significant change and will hold the entire executive team (not just the new executive) accountable for results. If the plan is to make the new executive responsible for “owning” the customer experience, then don’t create this position — it will only provide a handy scapegoat for executives who don’t make the required changes in their organizations.

While we’re on the topic of leading customer experience change, I’ll also point to a post from 2008: Corporate Customer Experience Groups; To Do Or Not To Do? Here’s what I discussed in that post:

Transformation isn’t easy. There’s a very strong need for a centralized group when companies are in a transformational mode, making changes that cut across the entire organization. This type of effort can’t be done without centralized support and facilitation. But companies that invest in centralized groups before the organization is committed to the journey are likely to either 1) completely offload responsibility for customer experience to these groups; or 2) stifle these groups through internal politics. In either case, they are likely to fail.

While these groups are important in some phases, they should never “take over” customer experience activities. Instead, they should facilitate and support transformational activities across the organization. In my research, I defined the following 8 categories of activities that these centralized customer experience organizations work on:

  • Customer insight management. Develop and support a voice of the customer program.
  • Customer experience measurement. Create and track key customer experience metrics and related management dashboards.
  • Employee communications. Make sure that employees are informed and engaged in the efforts.
  • Process improvement. Help the organization map interactions from the customer’s point of view and then redesign broken processes.
  • Customer advocacy. Make sure that customers’ needs are taken into account in all key decisions.
  • Culture and training. Actively work on cultural change and identify training required along the way.
  • Issue resolution management. Establish and support the process for solving customer issues that get escalated.
  • Cross-organizational coordination. Support the cross-functional teams and processes that govern the customer experience efforts.

The bottom line: Chief Customer Officers can be valuable in the right enviornments

The Four Customer Experience Core Competencies

Go to the updated version of this report

 

Temkin Group is happy to release this new Insight Report, The Four Customer Experience Core Competencies, which you can download for free.

This report describes the four competencies that companies need to master in order to build and sustain customer experience success.

Here’s the executive summary of the report:

Organizations that want to become customer experience leaders need to master four customer experience competencies: Purposeful Leadership, Employee Engagement, Compelling Brand Values, and Customer Connectedness. Gauge how close your company is to being a Customer-Centric Organization using Temkin Group’s competency model to identify strengths and weaknesses.

I urge you to read this report, share it with others in your organization, and take the competency assessment which is shown in figure 3.

The bottom line: Start building your customer experience competencies

Who’s Leading Customer Experience Efforts?

We asked large companies if they had a senior executive in charge of their customer experience efforts across the company. It turns out that 62% of our respondents have one of these leaders in place…

We also asked about the organization that is leading their customer experience efforts. The largest group driving these efforts, at 38%, is a dedicated customer experience organization. Marketing and customer service were next on the list…

The bottom line: Customer experience is a real “function”

The Customer Experience Journey

I’m thrilled to announce that we just published a new Forrester report called The Customer Experience Journey. This is the culmination of several months of research where I looked into how companies progress towards Experience-Based Differentiation (EBD), the blueprint for customer experience excellence. In this report, I defined five stages of EBD maturity:

Some other highlights from the report:

  • Here’s a little bit of what goes on in each of the 5 stages:
    • Stage 1 (Interested): In the first level of EBD maturity, organizations begin to believe that customer experience is an important part of their business. They start undertaking a number of different efforts without making any major investments, attempting to get a handle on the current situation. There’s a flurry of uncoordinated activity and no real leadership for customer experience activities.
    • Stage 2 (Invested): Companies enter into the second level of EBD maturity after they recognize that customer experience is worthy of a significant investment; in both capital and key personnel. So the approach to customer experience becomes more organized with an intensified focus on fixing problems. We start to see centralized customer experience groups and more formalized voice of the customer programs.
    • Stage 3 (Committed): In the third level of EBD maturity, firms are embracing customer experience because they understand the specific impact it has on business results like growth and profitability. The effort is no longer isolated to a few groups as customer experience becomes a major transformational effort across the organization. Instead of just trying to fix problems, the focus turns to redesigning processes.
    • Stage 4 (Engaged): When companies enter into the fourth level of EBD maturity, customer experience is a key component of everything they do. Instead of re-engineering processes, the focus turns to designing break-through experiences and solidifying the culture. There’s significant emphasis on employee engagement and companies become much less dependent on a centralized customer experience group.
    • Stage 5 (Embedded): At the highest level of EBD maturity, which can take companies several years to achieve, customer experience is deeply ingrained throughout the organization. Just about every employee feels ownership for maintaining the culture. The executive team no longer focuses on change but views itself as keeper of the customer-centric culture, which is viewed as a critical asset.
  • Based on results from 287 companies that took our Experience-Based Differentiation self-assessment, we estimate that 37% of firms have not yet reached the first stage of maturity and the 41% are in the first two stages. Only 4% are in the 5th stage.
  • I outlined 8 major activities that these customer experience groups work on including customer insight management, customer experience measurement, employee communications, and culture and training. 
  • I also looked at Customer-Centric DNA, which we define as: a strong, shared set of beliefs that guides how customers are treated. It turns out that Customer-Centric DNA starts to show up in Stage 3 of maturity (Committed) and becomes fully developed in Stage 5 (Embedded).
  • I also uncovered a set of behaviors that make up Customer-Centric DNA, which I call the 6 C’s of Customer-Centric DNA:
    • Clear beliefs
    • Compelling stories
    • Consistent trade-offs
    • Collective celebrations
    • Constant communications
    • Commitment to employees

The bottom line: Get ready for a multi-year customer experience journey.

Customer Experience Thrives With Executive Leadership

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. 

Customer Experience Execs Help Banks

A recent post, Lessons Learned From Chief Customer Officers, highlighted some of my findings from discussion with a number of senior customer experience executives. It was clear to me that these execs were making a difference within their organizations.

But what about for banks? They have an uphill customer experience battle — as we can see in this fun video created by IBM:

Earlier this year, Forrester did a joint survey of 190 North American banks with the American Banker which I discussed in the post “Banks Prepare For Customer Experience Wars.” I recently published a Forrester Research report called Customer Experience Execs Help Banks that compared responses from the 54% of banks that have an executive in charge of customer experience (which we’ll call a Chief Customer/Experience Officer, or “CC/EO”) across channels with those that don’t. Here is some of the data from that report:

  • The top 3 obstacles to customer experience success:
    • With CC/EO: Lack of cooperation across organizations (49%), lack of a clear customer experience strategy (48%), and lack of understanding about customers (36%)
    • No CC/EO: Lack of customer experience management processes (70%), lack of a clear customer experience strategy (51%), and lack of budget (40%)
  • Use a single set of customer feedback scores across the company:
    • With CC/EO: 61%
    • No CC/EO: 27%
  • Passed our self-test on principle #1 of Experience-Based Differentiation: “Obsess about customer needs, not product features:”
    • With CC/EO: 31%
    • No CC/EO: 18%

 The bottom line: Change takes leadership — bank on it!

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