Customer Experience Is The New Quality June 20, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence.Tags: Quality
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As I discussed in “My Manifesto: Customer Experience Is Free,” today’s push for customer experience is very similar to the quality push in the 1980s. The similarities include:
- Nobody “owns” it
- It requires culture change
- It requires process change
- It requires discipline
- Upstream issues cause downstream problems
- Employees are a key asset in the battle
- Executive involvement is essential
Interestingly, several people who I interviewed for my current research on customer-centric DNA mentioned quality techniques (e.g., Six Sigma, Lean Sigma, TQM) in our discussions. I even interviewed someone who had the very cool title of “EVP, Customer Experience and Kaizen.” (For those of you who aren’t familiar with Kaizen, it’s a Japanese word for continuous improvement. This quality concept was popularized in the 1986 book called Kaizen: The Key to Japan’s Competitive Success).
It’s no surprise that this is coming up in my research on culture given what Philip Crosby, the author of “Quality Is Free,” once said:
Quality is the result of a carefully constructed cultural environment. It has to be the fabric of the organization, not part of the fabric.
The bottom line: Make customer experience the fabric of your organization.
Will Thompson’s Departure Hurt Wachovia’s Customer Experience? June 12, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Financial services.Tags: Ken Thompson, Wachovia
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Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:
- According to American Customer Satisfaction Index (ACSI), Wachovia has the highest customer satisfaction of any bank it tracks, and has led the way since 2001.
- Forrester’s Customer Experience Index (CxPi) ranked Wachovia 4thout of 14 banks, only falling behind smaller banks: credit unions, BB&T Corp., and Citizens.
- Of the 14 banks in the Forrester’s CxPi, Wachovia placed 2nd in phone satisfaction, 5th in store/branch satisfaction, and 4th in Web satisfaction.
To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:
- 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
- 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
- 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
- 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
- 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
- 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
- 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”
Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:
Our longtime shareholders will recall, however, that it was not that long ago - 1999 - when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.
The bottom line: Great customer experience takes Thompson-like leadership.
Great Scene: Al Pacino On Cultural Change May 30, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence.Tags: Al Pacino
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My discussion with Tony Hsieh about the Zappos culture made me think about a scene from “Any Given Sunday” where Al Pacino addresses the football team that he’s coaching. Pacino’s speech is about how winning takes every player to focus on every element of every play; as a team.
My take: Pacino captures the essence of culture’s role in delivering great customer experience. Any CEO trying to fix her/his firm’s customer experience problem should think about Pacino’s words:
Either we heal as a team or we’re going to crumble; inch by inch, play by play, until we’re finished.
The bottom line: Customer experience is made up of millions of inches, delivered one inch at a time.
Discussing Zappos’ Culture With Tony Hsieh May 28, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.Tags: Tony Hsieh, Zappos
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As I mentioned in my post about popular customer experience topics, I’m currently researching best practices for the 3rd principle of Experience-Based Differentiation: Treat customer experience as a competence, not a function. It’s a topic that I sometimes call customer-centric DNA.
As part of that research, I’m interviewing a number of executives. So I reached out to Tony Hsieh, the CEO of Zappos, a company that’s renown for its great customer service.
Given our schedules, Tony and I ended up speaking on Monday (Memorial Day) morning at 10:30 AM EDT (7:30 AM his time). I checked out Tony’s twitter right before we spoke and found this tweet:
About to do a conference call. Way too early to be awake, couldn’t find another time to do it. Getting out of bed was not easy. Red Bull!
So let me start by thanking Tony for getting on the phone so early on a holiday. That shows his commitment to getting the Zappos word out!
How good is Zappos’ customer experience? Well, my wife loves Zappos. And my mother-in-law, after finding out about my discussion with Tony, excitedly told me that she loved Zappos because “it is so easy it use.” She once ordered a pair of shoes at 10:00 PM and was amazed to receive them before noon the next day.
Those are not isolated impressions about Zappos; the retailer has a lot of adoring customers. As a matter of fact, Tony shared an interesting fact with me: the company’s Net Promoter Scores (NPS) are so high that they do not provide any guidance on areas for improvement.
Well, the interview was great. Tony was open, informative, and inspiring. Here are some of the interesting factoids from our discussion:
- The company’s culture is defined in its ten core values that include items like “deliver WOW through service” and “be humble.”
- Tony felt funny when the company codified those core values, because it felt a bit too corporate. But he realized that it needed to happen given the company’s growth.
- Tony doesn’t want to prescribe actions for employees that show how much Zappos cares about customers; he wants employees to do things because they genuinely care about customers.
- Zappos uses its culture as a reason to hire and fire people. All new hire candidates have a separate interview with the HR department that focuses just on cultural fit.
- New employees go though 4-5 weeks of training that includes education about the culture and spending time on the phone with customers.
- To ensure that employees have a strong fit with the culture, new employees are offered $1,000 to quit after their first week of training. That way they weed out the people who aren’t committed to working at Zappos. Hsieh didn’t feel like enough people were taking the company up on its offer, so he discussed raising the bonus to $1,500.
- Every year Zappos publishes its “Culture Book” in which all employees are encouraged to write about what the culture means to them.
- Tony recognizes that cultures often go downhill when companies scale. He wants Zappos’ culture to get stronger as it grows.
- Tony offers this advice to Zappos employees: It’s completely up to you guys. I can’t force the culture to happen; so part of your job description is to display and inspire the culture.
I asked Tony if I could share some of our discussion in my blog. He said yes. Why? It met his basic principle for deciding what he’s willing to share:
Would sharing it make the world a better place?
The bottom line: Most firms would be a better place if they were more like Zappos.
Which Customer Experience Topics Are Hot? May 18, 2008
Posted by Bruce Temkin in Customer Experience Index, Customer experience, Customer-centric DNA, Experience-Based Differentiation, Marketing to Gen Y.3 comments
I like to look at how many people (Forrester clients) are reading my research reports. It helps me figure out the topics that people care about. So I decided to share some of that info in this post. These are my 15 most-read documents over the last 6 months [along with their publications dates]:
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The Customer Experience Index, 2007 [Nov. 07]
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The Gen Y Design Guide [Dec. 07]
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The Experiences That Satisfy Consumers [Feb. 08]
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Experience-Based Differentiation [Jan. 07]
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The Strength Of Customer Relationships [Feb. 08]
(Here are links to my complete list of research and my 2008 research agenda).
My take: Some observations about this readership…
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Experience-Based Differentiation (EBD), the oldest piece of research on this list, remains a vibrant blueprint for customer experience excellence. I continue to get a lot of demand on this topic for speeches, workshops, and advisory sessions. I am very excited about my current research on “Customer Centric DNA” which will illuminate the third principle of EBD: “Treat customer experience as a competence, not a function.” Look for that to get published in late June.
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Clearly the Forrester’s Customer Experience Index is hot, especially with three of our key industries: banking, insurance, and retail. We plan to repeat that research again this year, with even more industries.
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Many companies are beginning to actively look at how to reach Gen Y. Our data shows that these consumers are quite different and relatively underserved across many industries.
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One of my newer reports, The Business Impact Of Customer Experience, is getting a ton of readership because people are looking for quantitative proof (to reinforce their intuition) that customer experience is tied to loyalty. Well, this research shows that it is. So now it’s time for companies to get moving and make some improvements.
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Customer experience remains a hot topic overall. I continue to have the highest level of readership at Forrester; the number of clients that read my research during the past 6 months was nearly 70% higher than the second analyst on the list.
The bottom line: If people keep reading, then I’ll keep writing.
State Bank And Trust Pays It Forward January 15, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, Executive leadership, Financial services.add a comment
This past Friday I saw a very inspiring news report about State Bank and Trust in Fargo, N.D. In what it called the “Pay It Forward Challenge,” the bank gave each of its 500+ employees $1,000. The only stipulation, according State Bank’s chief operating officer Michael Solberg, was as follows:
There were three rules. You can’t give it to your family. You can’t give it to a co-worker. And you have to document your good deed. Other than that, the sky’s the limit.
The bank also gave every employee a video camera to document their gift.
When employees were asked what they hate about working at the bank, here were some of their responses:
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“What do I hate about management? They’re just too nice!”
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”I haven’t found anything yet.”
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“I have to go home.”
Why is this important for customer experience? According to COO Solberg:
That’s our mission statement: happy employees, happy customer.
My take: State Bank highlights a critical concept: Customer-centric DNA starts with employees.
The bottom line: Don’t you want to do business with a bank like State Bank?
Joie de Vivre Engages Employees And Everyone Wins December 19, 2007
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.1 comment so far
I just read an interesting article in Monday’s Wall Street Journal called Hotelier Finds Happiness; Keeps Staff Checked In. It’s a story about how Joie de Vivre Hospitality improved the performance of its hotels by focusing on employees. Here’s the opening story…
Former management at the Hotel Carlton in San Francisco didn’t like to replace aging vacuums, despite staff complaints. After Joie de Vivre Hospitality Inc. took over operations in 2003, the new manager bought a vacuum for each of the 15 housekeepers — and replaces them every year.
This was just one example of how Hervé Blondel, the Hotel Carlton general manager, said he tried to treat workers as partners rather than employees. In addition, he did things like sitting in for front-desk workers on their lunch breaks and heeding staff suggestions to eliminate minibars, which generated little revenue at the midprice hotel.
The founder and CEO of the firm, Chip Conley, definitely seems to understand the strong link between employee satisfaction and good customer experience. The article talks about a number of things that he does to engage employees like sponsoring parties and awards, arranging paid annual retreats for employees, hosting regular dinners with those who want to chat, and offering free classes on subjects from Microsoft Excel to English as a second language.
It looks like Joie de Vivre Hospitality is a great example of a key principle of Experience-Based Differentiation: “Treat customer experience as a competence, not a function.”
But that wasn’t what caught my eye the most in this article. What I really found amazing were the numbers that were quoted. Here’s what it said:
- Joie de Vivre’s turnover is 25% to 30% annually, about half of the industry average.
- Market Metrix estimates that each departure costs a midrange hotel about $5,000 in lost productivity, and recruiting and training a replacement
- Joie de Vivre has 2,500 employees. About 90% are hourly workers who take reservations, clean toilets and perform other low-status jobs.
So lets do some math with those numbers. Reducing the turnover from 50% to 25% for its 2,250 hourly workers means that the hotel chain has 562 fewer employees leaving each year. That saves the company more than $2.8 million each year. And that doesn’t even include any revenue from the likely uptick in loyalty and positive word-of-mouth. Wow!
The bottom line: Engaging employees makes sense for customers and the bottom line!
Ten Customer Experience Resolutions For 2008 December 17, 2007
Posted by Bruce Temkin in Branding, Customer experience, Customer-centric DNA, Experience-Based Differentiation.5 comments
Alas, 2008 is almost upon us. Which makes me think of this sentence from “Little Gidding” by T.S. Elliott:
For last year’s words belong to last year’s language and next year’s words await another voice.
With that in mind, here are 10 New Year’s resolutions that your company should consider making about its customer experience efforts:
- We shall focus more on our customers and less on ourselves
- We shall get to know more about what our customers really need
- We shall formalize a voice-of-the-customer program
- We shall incorporate personas in our experience design processes
- We shall clearly define our brand in terms of promises to customers
- We shall judge every interaction on how well it fulfills our brand promises
- We shall engage front-line employees in improving customer experiences
- We shall get the executive team to collectively own the customer experience
- We shall establish a multi-year journey towards customer-centric DNA
- We shall give customer experience the attention that it deserves
If you’re on board for some or all of these resolutions, make sure to read about Experience-Based Differentiation (EBD), which can act as a blueprint. And you can use the EBD self-test as a starting point.
The bottom line: Put customer experience on the top of your 2008 agenda!
Words Of Wisdom: Colin Powell On Customer-Centric DNA December 4, 2007
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, Words of wisdom.2 comments
Colin Powell has been quoted as saying…
If you are going to achieve excellence in big things, you develop the habit in little matters. Excellence is not an exception, it is a prevailing attitude.
My take: General Powell’s quote provides the key rationale for developing a customer-centric DNA. While firms may be able to craft discrete instances of good customer experiences, they need to develop the habit of meeting customer needs in the ”little matters” — the myriad of touchpoints with customers. And a company can NOT develop the habit of great customer experience without addressing the underlying processes and culture of the firm.
The bottom line: Customer-centric DNA exists when customer experience excellence is a prevailing attitude.
Customer Experience: The Invisible War October 26, 2007
Posted by Bruce Temkin in Chief customer officer, Customer experience, Customer-centric DNA.add a comment
As I mentioned in my post with words of wisdom from Babe Ruth, many firms have been asking me about building customer-centric DNA. This same focus also comes out loud and clear in my research with senior customer experience execs. I think it’s summed up nicely in this quote by a Chief Customer Officer that I shared in the post Lessons Learned From Chief Customer Officers:
What’s more important, but less tactical and takes longer, is the realization that customer experience is culture. It’s the mindset of our associates and their empowerment. Not stuff, but attitudinal. We’ve recognized that this is a journey.
The fact that customer experience is a journey that needs to focus on culture has a very important implication: you can’t easily benchmark your competitors. While all customer experience initiatives will have some highly visible, short-term results, the most dramatic improvements will come over time - as firms change attitudes and behaviors of employees across the organization.
Firms that spend too much time just trying keeping up with the visible changes made by their competitors may miss these more fundamental, yet less-visible shifts. As a result, they risk getting defeated in the long-term, invisible customer experience wars.
The bottom line: You may already be losing the customer experience wars — and not even realize it yet.
Words Of Wisdom: Babe Ruth On Customer-Centric DNA October 24, 2007
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, Words of wisdom.add a comment
Given the excitement around the World Series, it seems fitting to turn to a quote from Babe Ruth…
(from mlb.com)
“The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”
My take: Who knew that the Babe was a management guru?!? He was clearly foreshadowing the 3rd principle of Experience-Based Differentiation: Treat customer experience as a discipline, not a function.
I am starting to see more companies ask me how to develop a customer-centric DNA. That’s a great sign. It means that firms recognize that improving customer experience requires an enterprise-wide effort, not just some changes by a few front-line employees (see my post: My Manifesto: Great Customer Experience Is Free).
In a Forrester report that I wrote in March 2005 called The Customer Experience Value Chain, I said that Customer-Centric DNA consists of two elements:
- Customer familiarity. Databases and spreadsheets don’t buy things - people do. That’s why firms must go beyond analytics to understand their target customers. A good practice: Use field research to observe how users engage with channels like Web sites, kiosks, or stores - asking probing questions to uncover what users are trying to do, how they’re trying to do it, and what they’re thinking about during the process.
- Organizational engagement. Since internal alignment remains a critical challenge to improving customer experience, firms can’t just rely on the nebulous notion of “executive buy-in.” To create the change necessary across the company, firms need to engage in company-wide efforts that demonstrate a clear commitment to serving customer needs.
I think that is still a good way to think about Customer-Centric DNA.
The bottom line: Sometimes insight really does come out of the mouth of Babes.
Lessons Learned From Chief Customer Officers October 14, 2007
Posted by Bruce Temkin in Chief customer officer, Customer experience, Customer experience measurement, Customer-centric DNA, Executive leadership, Voice of the customer.add a comment
I just published a report called the “The Chief Customer/Experience Officer Playbook.” To research the report, I interviewed executives with responsibility for customer experience that cut across normal product and/or channel boundaries (we call them Chief Customer/Experience Officers or CC/EOs) from several different organizations including Air Transat, Alaska Air Group, Bank of America, Bombardier, the California State Automobile Association, Century Furniture, the Colorado Rockies, and Symantec. In addition, I spoke with Jeanne Bliss, author of the book Chief Customer Officer: Getting Past Lip Service to Passionate Action.
The research identified five categories of things that CC/EOs should do:
- Make sure that you’ve got the right environment.
- Prepare to take on a broad change agenda.
- Establish a strong operating structure.
- Kick off high-priority activities.
- Look ahead to the future.
The report goes into much more detail for each of these items. While I can’t share the whole report in my blog (that’s reserved for Forrester clients), I did want to share some of the most interesting quotes from the CC/EOs:
- “It takes massive support from senior management. This role can destruct careers.”
- “What’s more important, but less tactical and takes longer, is the realization that customer experience is culture. It’s the mindset of our associates and their empowerment. Not stuff, but attitudinal. We’ve recognized that this is a journey.”
- “Each of the groups in our company already had some customer experience efforts, so I wanted to make sure that they were on board and not threatened. I needed to talk to each of those groups individually. It’s an ongoing issue - and it’s an ongoing effort for me.”
- “We focus on employees first. Happy employees make a happy customer. They were very skeptical - so much of our communication is internally driven. We need to support the hell out of them.”
- “I do a read out to the leadership team every month and tell them my perspectives on how we’re doing (fact-based); a no-holds-barred discussion. No attempt to keep any of that stuff under the rug.”
- “Customers want one relationship with us and we’ve given them about 10. Our data sources and systems are isolated; the organizations are isolated. We’re trying to break down the silos.”
- “We’re changing metrics in the call center to eliminate focus on average talk time.”
- “If I did it over again, I would have focused earlier on consolidating our customer listening posts and voice of the customer efforts. We now look at the perception of reliability, not the actual reliability.”
- “We’re looking for line of site between our initiatives and NPS, which is a lagging indicator. We’ve worked on projects that have taken three quarters to improve the NPS.”
The bottom line: CC/EOs shouldn’t “own” customer experience, but they can really help support the organizational transformation required to improve it.
TD + Commerce = Better Experiences (hopefully) October 3, 2007
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, Financial services.add a comment
Yesterday, Canada’s TD Bank agreed to buy Commerce Bancorp for about $8.5 billion. I won’t spend any time discussing the merits of the deal (we’ll leave that to the financial analysts), but I do think that this will have an impact on customer experiences with banks — hopefully.
Commerce Bank, centered in New Jersey, has distinguished itself with a unique approach to branch banking — convenience. The bank describes itself as “America’s Most Convenient Bank.” I can’t say whether or not it lives up to that slogan, but it’s branches (which stay open 7 days/week) do provide a level of service that is well beyond most other banks.
My take: It really helps to have a single-minded focus on a customer-centric attribute like convenience when you’re trying to improve customer experience. Think about Staples’ single-minded focus on delivering interactions that make customers think “that was easy.” Every Commerce employee can ask him/herself: “Is what I’m doing now, or the decision that I am about to make, going to make customers think we are convenient?” This type of focus can be powerfully aligning!
So here’s where hopefully comes into play. Hopefully TD will provide the scale to expand Commerce Bank’s customer-centric approach into a wider geographic footprint. Is this because I want Commerce Bank to take over the world? No. I just want it to create enough of a threat to get other banks (BofA, Citi, Wells Fargo — are you listening?) more serious about their customer experience efforts.
For more context on the customer experience issues with banks, take a look a previous post called: Banks Prepare For Customer Experience Wars.
The bottom line: An expansion of Commerce Bank could mean better customer experiences for all consumers — hopefully!
