Report: The Economics of Net Promoter

We just published a Temkin Group report, The Economics of Net Promoter, which examines the link between NPS and loyalty across 19 industries. Here’s the executive summary:

Net Promoter Score (NPS) is a popular metric, but how does it relate to loyalty? We analyzed responses from thousands of consumers and examined the connection between NPS and three areas of loyalty: likelihood to repurchase, likelihood to forgive, and the actual number of times they recommend a company. Compared to detractors, promoters are almost six times as likely to forgive, are more than five times as likely to repurchase, and are more than twice as likely as detractors to actually recommend a company. Examining the data, we also found that consumers who gave a score between 0 and 4 have particularly low levels of loyalty. The analysis examines 19 industries: airlines, appliance makers, auto dealers, banks, car rental agencies, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, parcel delivery services, retailers, software firms, TV service providers, and wireless carriers. Promoters who are likely to repurchase range from 87% for grocery chains to 73% for TV service providers, those who are likely to forgive range from 72% for rental car agencies to 59% for TV service providers, and those who actually recommended a company range from 80% for retailers to 47% for parcel delivery services.

Download report for $295 (includes Excel dataset)

Here’s the first figure from the report. It has a total of 43 figures that include specific graphics for each of the 19 industries in the study.

Here’s an excerpt from the first section that examines the data cross all industries:

To understand how NPS relates to customer loyalty, we examined NPS scores for companies across 19 industries based on feedback from 10,000 U.S. consumers. The analysis covers more than 95,000 pieces of feedback from consumers about those companies. Examining three areas of loyalty across industries, looking at promoters versus detractors, we found that:

• Promoters are almost six times as likely to forgive. We asked consumers about their likelihood to forgive a company if it delivered a bad experience and found that 64% of promoters are likely to forgive compared with 11% of detractors.
• Promoters are more than five times as likely to repurchase. We asked consumers about their likelihood to make additional purchases from a company and found that 81% of promoters are likely to repurchase compared with 16% of detractors.
• Promoters are more than twice as likely as detractors to actually recommend. In a separate study of 5,000 U.S. consumers, we asked consumers how many times they actually recommended each company. It turns out that 64% of promoters have recommended the company compared with 24% of detractors.

We also examined the level of loyalty across each response on the NPS scale between 0 and 10. This analysis shows that:

• Super detractors are much less loyal. Forgiveness and repurchase loyalty stay at a consistent low level between 0 and 4 on the scale. Actual recommendations begin to increase after 5.
• Midpoint attracts low recommenders. When we examine the actual quantity of recommendations across the NPS scale it turns out that there’s significant drop in recommendations at the midpoint of the scale, when 5 is selected.
• Text anchors attract responses. We analyzed the volume of responses across the 11 point scale. Consumers appear to select the three responses with text anchors at a disproportionately high rate: “0,” “5,” and “10.”

Download report for $295 (includes Excel dataset)

The Excel file provides all of the data from the 43 figures.

Note: See our report, Net Promoter Score Benchmark Study, 2012 and the post 9 Recommendations For Net Promoter Score along with all of my other posts about NPS.

The bottom line: Promoters are more loyal than detractors.

P.S. Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix Systems, and Fred Reichheld.

The State of CX Vendors

We recently published a report looking at the state of CX management from the practitioner’s stand point. But what about the vendors in the market? To find out, we surveyed 98 CX vendors about their businesses (see graphics below). Here’s some of what we found:

• Prices are on the rise. About one-quarter of CX vendors say that their average selling price is increasing, which is more than three times the number that see prices dropping.
• Field and product marketing are key weaknesses. Only 20% of CX vendors think they are strong at field marketing and 24% feel that way about product marketing. Almost all CX vendors are growing, with 31% expecting to expand by more than 50% this year.
• Sales is key areas of focus. Over half of CX vendors see sales as a key area for improvement, next on the list is corporate marketing at 32%.
• Innovation is the path to success. Seventy-eight percent of CX vendors think that the innovation in their offerings will impact their business over the next two years. At the other end of the spectrum, they aren’t very worried about new entrants or pricing pressure.
• M&A is in the air. More than one-third of the companies that gave us an answer expect to make an acquisition or be acquired over the next 18 months.
• There’s a lot of growth. Nearly all respondents expect to increase their revenues this year and 31% expect to expand by at least 50%.
• Telecom and retail are hot markets. When we asked where they see growth, the two industries with the most momentum are telecom/media services and retail.
• U.S. is largest CX market. Nearly nine out of 10 CX vendors sell in the U.S. and 78% expect their sales to grow this year. Next on the list of growing markets are Asia, Canada, and Western Europe.

The bottom line: Companies are spending money on CX vendors

Cool Happenings From the CXPA MIE

We’re having a great day at the Customer Experience Professionals Association (CXPA.org) Members Insight Exchange in San Diego. Lots of wonderful sharing, learning, and networking amongst our CXPA members.

My update started by highlighting that the state of our association is STRONG. This slide has some facts and figures on the association (great stuff for only two years!).

Here’s the slide that I’ve presented at each of the three MIEs about why the CXPA is so important: We are all stronger as a community!

We also made some very cool announcements:

• CX Professional Certification. We have started work on the development of a professional certification program for CX management called the “Certified Customer Experience Professional” (CCXP). Think of it like the CPA is for accountants. The CXPA, as a non-profit, independent professional association is uniquely positioned to deliver on this great evolution for the marketplace. We plan on beginning certifications in Q4.
• CX Day: October 1, 2013. Mark your calendars for 10/1/2013 for Customer Experience Day! It will be a day for celebrating the profession. Some of the elements include Local Networking Events throughout the world, several live online events, announcements of awards for CX professionals who are making a difference, and a contest to see which companies are the most innovative in celebrating CX Day within their organization.
• MIE 2014. We also announced another important date, we will be holding next year’s Member Insight Exchange on May 13 & 14 in Atlanta.
• CXPA Extra Mile Award Winners. The CXPA is fueled by the passion and effort of our members. While many, many people contribute, we identified three fthat have gone well above and beyond the call of duty: Desirree Madison-Biggs, Karl Sharicz, and Yvonne Nomizu. Thank you to our winners and to everyone else who contrinutes their time to the CXPA.
• CX Innovation Award Winners: This is the second year that we are giving awards for innovative CX practices. This year’s winners are Blue Cross Blue Shield of Michigan and Sage. The other finalists are Autodesk, Barclaycard US, and Oklahoma City Thunder. Awesome job! You can see more of their stories on the CXPA site.

Here’s a photo from one of the favorite activities at the MIE, Show & Tell. Attendees go from table to table as a member at each table explains a specific CX Tool that they are using. This type of member to member sharing is one of the things that makes CXPA events so distinctive.

The bottom line: CXPA is thriving, all CX professionals should join us!

Report: The State of Customer Experience Management, 2013

We just published a Temkin Group report, The State of CX Management, 2013. The research shows where large companies are along their customer experience journeys. Here’s the executive summary:

We surveyed more than 200 large companies and found an abundance of Customer Experience (CX) ambition and activity. Most companies have a CX executive leading the charge, significant CX activities being coordinated by a central team, and a staff of six to 10 full-time CX professionals. Using Temkin Group’s CX competency assessment, we found that only six percent of companies have reached the highest two levels of customer experience maturity as firms struggle the most to master Employee Engagement and Compelling Brand Values. When compared with CX Laggards, CX Leaders have stronger financial results, more CX ambition, more CX leadership, and they are more successful with their employee engagement efforts. Executives in companies with stronger CX competencies also focus more on delighting customers and less on cutting costs.

Download report for $195

Here are some of the findings from the research:

• While only eight percent of companies believe that they are leading their industries in CX today, 62% have goals to be the best within three years
• Sixty-one percent of respondents have a senior executive in charge of the company’s overall CX efforts and 71%  have a centralized CX group
• The median firm in our study has six to 10 full time CX employees
• Seven out of ten respondents identified “other competing priorities” as a significant obstacle to their CX efforts
• Only six percent of the companies that completed our CX Competency and Maturity Assessment have made it to the top two levels of maturity, Align and Embed
• We compared companies with leading CX efforts with other firms and found that they have better financial performance, more centralized CX activities, better employee engagement, stronger employee engagement, and more management attention to corporate culture

Download report for $195

The bottom line: Most companies remain in the early stages of CX maturity

Examining the Happiness of Mothers on their Day

First of all, Happy Mother’s Day to all of the mothers that read my blog. Given the day, I decided to examine our consumer research to find out if mothers are, in fact, happy. My previous analysis already shows that females are happier than males. But what about if they are mothers or not? I examined happiness levels of more than 5,000 U.S. females based on their family situation.

As you can see in the chart below, married moms are by far the happiest females.

The bottom line: Happy Mother’s Day!!!

Report: Employee Engagement Case Studies: Five I’s in Practice

We just published a Temkin Group report, Employee Engagement Case Studies: Five I’s in Practice. It’s a deep dive into how companies are systematically improving employee engagement. Here’s the executive summary:

Engaged employees create engaged customers, kicking off what Temkin Group describes as a virtuous cycle. More and more organizations are paying attention to the connection between employee engagement and customer experience through a variety of efforts spanning five areas that we call that Five I’s of Employee Engagement: Inform, Inspire, Instruct, Involve and Incent. We’ve compiled case studies of three organizations that are engaging employees and driving results: BMO Financial, Hampton brand, and Safelite AutoGlass.

Download report for $195

Here is an overview of how the three companies we examine are addressing the FIve I’s of Employee Engagement:

Download report for $195

The bottom line: Employee engagement is worth the effort of learning best practices

Advantage Rent A Car and USAA Lead in 2013 Temkin Forgiveness Ratings

All companies, even customer experience leaders, make mistakes. But how much goodwill have companies built up for consumers to forgive them after those miscues? To answer this question, Temkin Group surveyed 10,000 U.S. consumers about companies with whom they’ve recently interacted. We used this data for the third annual Temkin Forgiveness Ratings of 246 companies across 19 industries.

Download entire dataset for $295

Company Results

Here are the highlights of the 246 companies in the 2013 Temkin Forgiveness Ratings:

• Advantage earns top spot. With an excellent score of 61%, Advantage earned the highest rating.
• USAA dominates forgiveness. USAA grabbed the next three spots for its banking, insurance, and credit card businesses.
• The rest of the top 10. H.E.B., Blackboard, Aldi, Alaska Airlines, credit unions and Publix round out the top 10
• No industry owns the top. The top 25 companies in the ratings comes form a variety of industries: Four grocery chains, three airlines, three retailers, two banks, two hotel chains, two investment firms, two software firms, one appliance maker, one auto dealer, one credit card issuer, one fast food chain, one health plan, one insurance carrier, and one rental car agency.
• HSBC dominates the bottom. HSBC earned the bottom two spots in the ratings for its credit card and banking businesses.
• Many TV service providers are at the bottom. Six of the bottom 12 companies are TV service providers: Cox Communications, Time Warner Cable, Comcast, Verizon, Charter Communications, and Optimum (iO)/Cablevision.
• USAA most outperforms its peers. We compared company ratings with their industry averages and USAA came in the top three spots, 36 points above in banking, 31 points ahead in credit cards, and 28 points ahead in insurance. Three other companies are more than 20 points above their industry averages: Advantage (car rentals), credit unions (banking), and TriCare (health plans).
• HSBC most underperforms. HSBC fell the farthest below its industry average in two areas, 23 points behind its peers in banking and credit cards. Five other companies had scores that were 15 points and more below their industry: US Airways (airlines), Motel 6 (hotels), McAfee (software), Kia (auto dealers), and Hertz (rental cars).

We also examined year-over-year results for 204 companies that were in both the 2012 and 2013 Temkin Forgiveness Ratings. Here are some highlights of that analysis:

• Chrysler improves the most. With a jump of 29 percentage points, Chrysler is the most improved company.  Six other companies gained 20 points or more: Continental Airlines, Citigroup, Avis, EarthLink, Ameriprise Financial, and Alaska Airlines.
• US Cellular declines the most. With a drop of nearly 20 percentage points, US Cellular dropped the most in 2013.  Nine other companies fell by more than 10 points: Bright House Networks, HSBC, Cox Communications, Hertz, PNC, SunTrust Bank, Dollar Rental Car, Hyatt, and TD Ameritrade.

Industry Results

Here are the highlights of the 19 industries in the 2013 Temkin Forgiveness Ratings:

• TV service providers are unforgivable. TV service providers, as an industry, earned the lowest Temkin Forgiveness Rating of 12%. It was five points below Internet service providers and seven points below wireless carriers.
• Grocery chains are the most forgivable.  With an average rating of 39%, grocery chains are the highest scoring industry. Three industries are just four points behind: hotel chains, auto dealers, and rental car agencies.
• Credit cards make the most improvements. Credit cards made the largest improvement, nine percentage points, over the previous year.  Auto dealers, rental car agencies, and airlines also improved by more than five points.
• TV service providers head in the wrong direction. Led by TV service providers that dropped three points between 2012 and 2013, three industries earned lower scores in 2012. The other industries are retailers and appliance makers.

Calculating the Temkin Forgiveness Ratings

During January 2013, Temkin Group asked consumers to identify companies that they have interacted with during the previous 60 days.  For a random subset of those companies, consumers are asked to rate companies as follows:

How likely are you to forgive these companies if they deliver a bad experience?
Responses from 1= “extremely unlikely” to 7= “extremely likely”

For all companies with 100 or more consumer responses, we calculated the “net forgiveness” score. The Temkin Forgiveness Ratings are calculated by taking the percentage of consumers that selected either “6” or “7” and subtracting the percentage of consumers that selected either “1,” “2,” or “3.”

Download entire dataset for $295

To see all of the companies in the Temkin Forgiveness Ratings as ell as all of our other Temkin Ratings and sort through the results, visit the Temkin Ratings website

The bottom line: Forgiveness is an asset that you accumulate by consistently meeting customer needs.

Customer Experience Reading List for Execs

Here’s a short list of posts that I’d recommend sharing with executives that want to get up to speed on customer experience:

1. The Four Customer Experience Core Competencies. The path to customer-centricity requires mastering these four competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness. The report also has a self-assessment tool that execs can use to gauge their organization.
2. The 6 Laws Of Customer Experience. Every executive should understand these fundamental drivers of how organizations deliver customer experience.
3. My Manifesto: Great Customer Experience Is Free. Provides a perspective of how to think about customer experience management.
4. 10 CX Mistakes to Avoid. Highlights common mistakes that inhibit customer experience efforts and provides advice for overcoming these obstacles.
5. The Future of Customer Experience. Shows where customer experience is heading and identifies competencies and skills necessary to gain CX maturity.
6. The ROI of Customer Experience. Shows the link between good customer experience and higher loyalty and revenues.
7. Three Characteristics Of Transformational Leaders. Identifies what leaders need to do if they want to drive change in their organizations.
8. Lessons in CX Excellence. Provides details of the customer experience efforts of 11 organizations that were finalists in Temkin Group’s 2012 Customer Experience Excellence Awards.

If your execs show interest in customer experience, then sign them up for the monthly CX Journal so they can continue on their CX learning journey.

The bottom line: An informed executive is a critical CX asset.

Happy Birthday CXPA.org!

It’s hard to believe that it was just two years ago that Jeanne Bliss and I co-founded the Customer Experience Professionals Association (CXPA.org).

For those of you who aren’t familiar with the CXPA, it’s a non-profit association that’s dedicated to supporting and enhancing the profession of customer experience management. Thanks to the support of a wonderful board of directors and a myriad of people who have volunteered their energy, passion and time to the CXPA, we’ve been able to do wonderful things. Here’s a sampling of what the CXPA has achieved in just two years:

• Built a thriving community of more than 2,100 CX professionals from 50 different countries
• Created “Ask the CX Experts” program where a team of CX experts responds to questions submitted by members
• Held more than 40 local networking events in 15 cities including Toronto, London, and Sydney Australia where CX professionals come together to learn, share and network.
• Offered Best Practice Visits to Fidelity Investments and Intuit where CXPA members gained deep, first-hand access to leading-edge CX programs
• Delivered more than 70 community calls and webinars on critical areas of CX content, all of which are available in the CXPA’s online member center
• Created a growing library of more than 40 CX Tools, which are artifacts shared by CX practitioners that can be downloaded from the online member center
• Maintain a continuously updated list of job postings in the CX Career List
• Offer research, white papers and case studies on a variety of CX topics
• Will be holding our third Members Insight Exchange in a few weeks in San Diego, which is a highly interactive event for learning, sharing and networking.

Here are the reasons we founded the association (from my April 2011 blog post: Announcing The CXPA; Customer Experience Professionals Unite!):

• There are many customer experience networking groups, but the industry has hit a stage where it needs a single, collective voice to map its evolution
• We want to help customer experience professionals embed customer experience management skill sets across their organization
• Our goal is to identify standards and best practice approaches and transfer those skills across the industry
• We want to ensure that that customer experience management continues to generate a vibrant set of opportunities for customer experience practitioners

It’s only been two short years, but I think we’ve made strong inroads against those goals.

As proud as I am about what the CXPA has accomplished so far, I’m even more excited about its future. As we go deeper into the era of CX professionalism, the growing number of CX professionals will find new and enhanced programs from the CXPA helping them to succeed. The association will also be doing more work to raise the stature and visibility of the entire profession.

I want to send a big thank you to everyone who has helped the CXPA reach this major milestone!

The bottom line: Every CX professional should be a member of the CXPA

Report: Social Media Benchmark, 2013

We just published a Temkin Group report, Social Media Benchmark, 2013. This data snapshot examines how often consumers use social media on their computers and mobile phones.

In January 2013 we surveyed 10,000 U.S. consumers about their social media use patterns and compared the results to data that we collected in January 2012. This analysis examines the use of Facebook, LinkedIn, Twitter, Google+, and third-party rating sites. This report also examines how the data varies by type of mobile phone and identifies consumers’ preferred communication channels. The analysis breaks down the data by age group.

Download report for $195

The first figure in the report (out of 10 total data graphics) shows the change in social media use between 2012 and 2013, highlights a reduction in active Facebook usage especially by younger consumers.

Here are some interesting factoids about social media and mobile usage in the U.S.:

• The percentage of active Facebook users has declined for consumers younger than 55, but it’s on the rise for older consumers.
• One-quarter of consumers use their mobile phones to access Facebook daily while 10% access Twitter, 8% access Google+, and 6% access LinkedIn that frequently.
• More than 90% of  consumers under the age of 45 who use LinkedIn, Google+, and third party rating sites daily on their computers are also doing so on their mobile devices.
• iPhones and Android phones dominate younger consumers while Blackberry’s sweet spot is with 35- to 54-year-olds. Windows Mobile has only 2% of the market, but its share is consistent across age groups
• iPhone users are the most likely to access Facebook and Twitter daily while Blackberry users are the most likely to access Google+, LinkedIn, and third party rating sites.
• Young consumers prefer to connect with friends via text message, but that preference has declined since 2012. Older consumers prefer to make calls on landlines while those in their 40s and 50s prefer to talk on their cell phones

Download report for $195

The bottom line: Mobile is a big catalyst for social media

 

Bezos Letter Describes Amazon’s Customer-Centric Blueprint

In his recent letter to shareholders, Amazon.com CEO Jeff Bezos provides insight into a truly customer-centric organization. The letter demonstrates how Amazon operates with a long-term view of customer value. Here are some of the most powerful components of the letter:

“Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.“

“I frequently quote famed investor Benjamin Graham in our employee all-hands meetings – “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience. We aren’t 10% smarter when that happens and conversely aren’t 10% dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.”

Bezos understands the value of Amazon’s most critical asset, customer loyalty, which I’ve defined as the willingness to consider, trust, and forgive. That focus is what put Amazon.com on the top of the retail sector in the 2013 Temkin Experience Ratings. Great leaders focus on building that customer loyalty asset with the knowledge that it will generate the best returns for all stakeholders in the long run.

Here are some other components of Bezos’ letter that I want to comment on…

“As regular readers of this letter will know, our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors… One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to.”

My take: Too many companies overly focus on their competition, a process that leads to collective mediocrity. Great companies focus their energies, from learning to innovating, on three questions: who are our customers? what do they want and need? how can we provide them even more value?

“We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers.“

My take: This type of proactive approach is not only great for building trust with customers, but it also establishes pressure within Amazon to do the right thing all the time. It creates an environment where mistakes are proactively found, fixed, and prevented in the future.

“Our business approach is to sell premium hardware at roughly breakeven prices. We want to make money when people use our devices – not when people buy our devices. We think this aligns us better with customers. For example, we don’t need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!“

My take: If you want to align your interests with your customers, then create pricing models where you only make money when customers gain value. This is an increasingly important concept as more products and services are connected online where usage and value can be more closely monitored.

“As proud as I am of our progress and our inventions, I know that we will make mistakes along the way – some will be self-inflicted, some will be served up by smart and hard-working competitors. Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But – with a bit of good fortune – there will also be a few that open up into broad avenues.”

My take: Every company makes mistakes, but companies that build loyalty with customers also earn their forgiveness. That’s why Amazon scores so high in the Temkin Forgiveness Ratings. It also allows employees to have the confidence to try new things.

The bottom line: Customer-centric organizations are purposefully built

30% of U.S. Workers Have Practical Wisdom

In a previous post, I discussed a wonderful TED talk by Barry Schwartz called Our Loss of Wisdom. Schwartz references what Aristotle called “practical wisdom,” the combination of moral will and moral skill.

As an analyst at heart, I decided to quantify practical wisdom. How? By creating two statements that are indicative of moral will and another two that reflect moral skill.

• Moral will statements:
  • I have an obligation to help other people when I’m doing my job, even if it’s not part of my job description
  • I am willing to work harder or longer if my efforts will help other people
• Moral skill statements:
  • I regularly do things that aren’t on my job description because they will help other people
  • I understand when it’s appropriate to break my company’s rules in order to help customers and other people

In the recent Temkin Group consumer benchmark study, we asked more than 5,000 U.S. employees if they agreed with those four statements. As you can see in the chart below:

• More people agree with the moral will questions than the moral skill questions
• We classified people as having moral will or skill if they agreed with both of the related statements. Sixty-nine percent have moral will, but only 36% have moral skill
• When we looked at the combination of these skills, we found that 30% have practical wisdom—the combination of moral will and moral skill

I will continue to dig deeper into our dataset to understand the demographics and attitudes that go along with practical wisdom. So stay tuned.

The bottom line: When it comes to morality, there’s more will than skill

Two Thumbs Up For UK’s Engage For Success

I want to congratulate the UK government for understanding the power of employee engagement. In 2009, the Labour Government engaged David MacLeod and Nita Clarke to produce a research paper on the importance of engagement to the UK economy. Based on that study, the government backed the launch of the Engage for Success movement last November. In a video that was made for the voluntary movement, a young worker proclaims…

“…give employees a voice… create a place where people want to shine… I’m not a human resource; I’m a human being.”

Here are a few comments from the authors of the initial study and leaders of the movement:

• MacLeod: “We can show you places where the workforce has been reduced but levels of engagement have gone up. It’s because the challenge has been explained to the workforce, their ideas have been taken on board and there’s been a partnership. Anyone who says ‘we can’t do this because there’s a recession on’ just doesn’t understand what engagement is.”
• Clarke: ”If you’re not trying to improve engagement, you may as well be standing on top of a building chucking money away… “HR needs to be expert, they need to orchestrate how to find engagement in a transformational way… This is HR’s opportunity to be at the top table, to help the CEO and top team ensure people are behind their strategy.”

My take: I totally agree. Employee engagement is critical for an organization’s success, it represents an opportunity/imperative for HR to become more strategic, and it could even be a catalyst for improving the competitiveness of an entire country.

To achieve those benefits, however, the prevailing approach to management must change. Rather than imposing layers of strict controls over employees in an attempt to ensure financial success, companies need to engage employees and reap the benefits. While this may seem like a subtle difference, it leads to a profoundly different approach to management—from controlling to leading.

Employees aren’t a fungible commodity that you burn through on the way to success, they are your critical assets. Herb Kelleher, founder of Southwest Airlines, does a great job of describing his enlightened approach to employees:

“If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need.”

The following chart, which is the initial figure in the Temkin Group report The Five I’s of Employee Engagement, highlights how employee engagement is the start to a virtuous cycle and showcases compelling data from our benchmark study of U.S. employees. As you can see, our research on U.S. employees concurs with MacLeod’s and Clarke’s findings.

Unfortunately, HR has not yet embraced employee engagement as a strategic imperative. In a recent Temkin Group study of HR professionals at large organizations, we found that 75% of HR professionals recognize that employee engagement is important, but only 61% rate their HR group as being good or excellent in this area. As you can see in the chart below, employee engagement has the second highest capability gap amongst the 14 areas we examined.

In our work with organizations, we rarely see HR organizations driving any serious employee engagement activities. HR groups are more focused on transactional activities such as hiring, firing, compensating, and training. Given the opportunity for creating value, it’s time for HR to take the lead in this critical area. As Clarke stated: “This is HR’s opportunity to be at the top table.”

The bottom line: Employee engagement is critical for organizations and for HR

Seven Steps for Developing Customer Journey Maps

In Temkin Group’s previous report on B2B CX best practices, we provide examples of companies using a customer journey map (CJM), which is a critical CX tool. We included this graphic which is valuable for any company, B2B or B2C, that is thinking about using CJMs.

Let’s circle back with the basics, what is a CJM? It’s a representation of the steps and emotional states that a customer goes through during a period of time that may include some interactions with your organization. CJMs are valuable because they help identify how a customer views an organization by putting the interactions with a company in the context of the customer’s broader activities, goals and objectives. The output often includes an easy to understand graphic such as this example I’ve used from Lego for many years:

Here’s an example of a CJM we created to showcase the power of CJMs. Note how the journey represents the customer’s point of view and not just the company touchpoints.

Often times, companies mistake a CJM for a touchpoint map, which is looking at individual interactions or “touches” with customers. The problem with this approach is that it often loses the broader context of how that touchpoint fits within the overall goal and objectives of the customer. As a matter of fact, mapping internal touchpoints is one of my 10 CX Mistakes to Avoid.

Given the importance of CJMs, I put together answers to some FAQs:

• Do we need to do customer research? No, but it is much better if you do. If you assemble the right front-line employees who have day-to-day interactions with customers, then your CJM may be somewhat accurate. But very likely it will be missing some steps and perceptions of customers, especially in areas of the journey where the customer doesn’t think about the company. And if you just pull together a bunch of people in headquarters, then your CJM will often represent an oversimplified, fantasy about what customers go through. The best CJMs start with internal information to frame the effort, but spend the time to validate and update the CJM through strong customer research.
• What type of customer research do we need to do? This is all about qualitative research. You won’t find how customers feel about the journey in your quantitative datasets. You will need to go out and speak to customers within your different segments to understand how they view the overall journey. This can include ethnographic techniques like journaling and contextual inquiry. After you have the journey defined, you can use some quantitative methods to identify how often some activities occur.
• Do we need to hire an outside firm to do a CJM? You don’t need to, but there are some good firms with a lot of experience in this area. If your internal research organization has strong ethnography skills, then you can probably follow our seven steps above and complete it on your own. As with any activity, the vendors that have done a lot of these are going to be more skilled at the process and in making sure that the output is actionable. If you can’t afford to hire an outside firn, then it’s still worthwhile to go ahead and do the project internally as best as you can.
• Is there a CJM that we can copy? There are a lot of examples of the physical maps, but that’s not what’s important about the process. You are doing CJMs to uncover specific insights that you will use for fixing problems, wowing customers in the future, or establishing measurement tracking systems. If you focus too much on copying someone else’s CJM, then you will often miss the nuances that are key for your customers and your company. And, more importantly, you lose the institutional learnings that come from going through the process.
• Do we need to do a CJM for every customer segment? Yes, at least every important one. It may be that some of your customer segments follow the same journey, in which case you can combine them but you don’t want to have CJMs that are an amalgamation of multiple segments. You’ll end up with a bunch of generalities and less useful insights. It’s okay to have the output show one journey with different variations after you’ve examined each segment individually.
• Are CJMs for the entire lifecycle of a customer or for a specific stage? Yes and yes. CJMs can be used at different levels of the customers’ journey. They can examine how customers go through a multi-year journey like the car ownership experience to a more specific journey like going on a family vacation.
• Are CJMs good for finding mistakes to fix or for designing future state experiences? Yes and yes. CJMs can be used to identify gaps in the current state of experiences as well as helping to identify the opportunities for better future state experiences. Depending on your goal, you will likely want to adjust your customer research approach.
• How much detail do we need? It depends on what you are trying to accomplish. The maps shown above are at a level that would help point a company into specific areas for improvement. If you wanted to redesign an area such as rebooking a flight, then you would really want to get much more granular information about the customer journey in that area.

The bottom line: Good things happen when you focus on your customers’ journey

Report: Best Practices in B2B Customer Experience

We just published a Temkin Group report, Best Practices in B2B Customer Experience. Here’s the executive summary:

Customer experience is gaining more attention within business-to-business (B2B) organizations. Rightfully so—customer experience drives loyalty with business customers. At the same time, clients and prospects, who increasingly compare business interactions with their personal consumer experiences, are raising the expectations of B2B relationships. While our research has shown that most B2Bs are still mastering the basics, our interviews with 28 companies uncovered best practices for building a more client-oriented mindset through closed-loop voice of the customer programs, customer journey maps, and virtual client advisory boards. Using the customer insights they collect, forward-thinking B2B organizations are becoming more client-centric in how they develop new business, create account plans, and proactively provide support (or intervene when service breakdowns occur). To sustain superior customer experience, B2B firms must master four competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.

Download report for $195

The report identifies many best practices across two areas:

• Building a client-oriented mindset. Organizations have a natural tendency to operate from an internal perspective, focusing on the needs of their functional silos more than on their clients. To offset this tendency, B2B firms need to build repeatable and systematic processes for gathering, analyzing, and taking action on customer insights. The report identifies best practices in the following areas:
  • Develop Closed-Loop Voice of the Client (VoC) Programs. Having a reliable flow of customer insights across the organization is critical to driving customer-centric actions.
  • Use Journey Maps to Better Understand Clients’ Needs. To better understand how clients see their experiences, B2B organizations can use a tool known as customer journey mapping.
  • Tap Into Virtual Client Advisory Boards. Client advisory boards (CAB) and councils provide the opportunity to acquire more insight into customer needs and expectations.
• Building client-centric relationship management. Today, account management functions tend to be oriented around sales generation and firefighting. To build stronger, longer-term ties with clients, Temkin Group expects that B2B firms will head towards a more client-centric model of account management that uses client insights throughout the relationship management continuum. The report identifies best practices in the following areas:
  • Account-Level Experience Reporting. To acquire, retain, and grow B2B relationships, account managers need to understand what’s working and not working for each of their clients.
  • Insightful Business Development. B2B organizations that gather and use the right customer insights during this early stage will create a differentiated experience from the start of the relationship
  • Collaborative Account Planning. By taking a structured and collaborative approach to developing in-depth account plans, companies can tap into their enterprise knowledge.
  • Proactive Intervention and Support. B2B organizations need to use customer insights and feedback from account managers to intervene in service experiences gone wrong as quickly as possible with well-defined, robust recovery procedures.

The report provides a plethora of specific practices in these areas from companies such as Becker and Poliakoff, CDW, Cisco, Citrix, Dell, Enterasys, Equinix, Genworth Financial, Lithium, Lynden, Philadelphia Insurance Companies, Oracle, Salesforce.com, SanDisk, Stream Global, Verint, and VMware.

Download report for $195

The bottom line: B2B companies need more customer-centric enterprise relationships