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.

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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

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

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

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.

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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.

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

 

Report: The Four Customer Experience Core Competencies

Temkin Group just published an update to the report that defines one of our fundamental frameworks, The Four Customer Experience Core Competencies. This report lays out the building blocks for customer experience success. This topic is so important that we’re giving this report away for free. Here’s the executive summary:

Research shows that customer experience is highly correlated with loyalty. While any company can improve portions of its customer experience, it takes more than a few superficial changes to create lasting differentiation. 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. To gauge your progress, actively use Temkin Group’s Customer Experience Competency and Maturity Assessment. This assessment will identify areas of strength and weakness in your CX efforts as well as identify your progress along six stages of CX maturity: Ignore  Explore, Mobilize, Operationalize, Align, and Embed.

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Here’s how I describe the four CX Competencies:

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The bottom line: It’s time to improve your CX competencies

 

Report: Lessons in CX Excellence

We just published a Temkin Group report, Lessons in CX Excellence. This 127 page report provides a rich set of best practices and a glimpse into the customer experience efforts of 11 companies that were finalists in Temkin Group’s 2012 Customer Experience Excellence Awards. Here’s the executive summary:

The following 11 organizations are finalists in Temkin Group’s 2012 Customer Experience Excellence Awards: Blue Cross Blue Shield of Michigan, Bombardier Aerospace, Citrix, EMC, Fidelity Investments, JetBlue Airways, Microsoft, Oklahoma City Thunder, Oracle, Safelite AutoGlass, and Sovereign Assurance NZ. This document provides highlights of their customer experience efforts and best practices across the four customer experience competencies: Purposeful leadership, compelling brand values, employee engagement,  and customer connectedness. The report also includes the finalists’ detailed nomination forms.

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Here are excerpts of our description from each of the finalists:

• In just 17 months, Blue Cross Blue Shield of Michigan assembled its customer experience team and leveraged a variety of insights and data to devise a comprehensive strategy to “Find and Fix” near-term opportunities and “Transform” the organization to be customer-centric at its core.
• Bombardier Aerospace drives continuous improvement through its multi-faceted Amazing Customer Experience (ACE) initiative. Customer feedback is essential to ACE and is gathered through a variety of channels including surveys, customer forums, and Bombardier’s Executive Listening Program.
• Citrix places an emphasis on giving customers a voice in its product roadmap and building a user-centered culture in order to continuously improve its products, services, and experiences. Through the Design Matters initiative, Citrix helps its employees rethink core business processes with a focus on customer needs.
• EMC has a Total Customer Experience (TCE) program with a mission to enable business growth through improvements based on a customer-focused, data-driven strategy. The program provides ways for customers, partners, and EMC field personnel to provide feedback on their experiences, and measures customer quality in every interaction.
• Founded on the core value “The Customer Is Always First,” Fidelity Investments has a well-established, well-rounded program that delivers enterprise-wide results. The program is comprised of four integrated elements: Voice of Customer & Associate, End-to-End Process Improvement, Culture & Communications, and Measurement & Rewards.
• The Customer Insight (CI) team at JetBlue Airways provides the business with a multi-faceted view of its customers through feedback from surveys, text analytics, social media monitoring, and third party benchmarking. The CI team also has a program in place to address all unsolicited customer feedback that is received regardless of source through its Customer Retention Program.
• Microsoft believes that the better it is at building a culture of accountability, listening and responding to customers, simplifying offerings, and innovating based on customer feedback, the stronger its Customer and Partner Experience (CPE) will be.
• “Create Repeat Guests Profitably” is the mission of the Guest Relations team of the Oklahoma City Thunder. The team uses various fan feedback platforms to gather feedback including email, text message, telephone, written submissions, and social media, all of which are promoted on the team’s website and during in-game announcements.
• Oracle drives consistent customer experience activities across all regions and lines of business through a structured framework and standardized approach to monitoring the customer experience: Listen, Respond, Collaborate for Customer Success. The portfolio of feedback tools includes transactional and product surveys, relationship surveys, customer advisory boards, user experience labs, and independent user groups.
• On the company’s path back from bankruptcy, Safelite AutoGlass CEO Tom Feeney set a goal in 2008 to double business in four years by 1) putting Safelite’s people first by focusing on talent development and employee engagement and 2) going above and beyond to delight every customer.
• Sovereign Assurance of New Zealand’s strategy is to create customer engagement and advocacy through effortless experiences, with a program of initiatives around four key levers: customers front and center, stickier relationships, maximize touch points, and focus on value.

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The bottom line: There’s a lot to learn from these excellent CX efforts

Is Your Mission Inspiring Employees?

In Temkin Group’s recent consumer benchmark study, we asked a number of questions about how full-time employees view their employers. Using the dataset, I examined the effect of an organization’s mission. As you can see in the figure below, employees who are inspired by their employer’s mission are significantly more committed and productive.

It’s clear that an inspiring mission is an incredibly valuable asset. Here are some examples of missions from organizations that are capitalizing on this phenomena:

• Ritz-Carlton’s Credo:  The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
• Southwest Airlines: The mission of Southwest Airlines is dedication to the highest quality of Customer Cervice delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
• USAA: To facilitate the financial security of its members, associates and their families through provision of a full range of highly competitive financial products and services. In so doing, USAA seeks to be the provider of choice for the military community.
• Rackspace: Learn more about how we provide Fanatical Support to our customers, our work environment and the Rackers who make it special!
• San Diego Zoo: San Diego Zoo Global is a conservation, education, and recreation organization dedicated to the reproduction, protection, and exhibition of animals, plants, and their habitats.
• Mayo Clinic: To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.
• U.S. Navy SEALS: In times of war or uncertainty there is a special breed of warrior ready to answer our Nation’s call. A common man with uncommon desire to succeed. Forged by adversity, he stands alongside America’s finest special operations forces to serve his country, the American people, and protect their way of life. I am that man.
• Amazon.com: Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online. 
• Nike: To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.
• Google: Google’s mission is to organize the world’s information and make it universally accessible and useful.

Five Questions That Define An Inspiring Mission

Words alone are not what make a mission inspiring. Here are five things to keep in minds as you examine your organization’s mission:

1. Is it written? While the words are not what makes a mission, it needs to be written down so that it can be shared consistently across an organization.
2. Is it real? A mission statement is only valuable if it truly embodies the mission of the company, otherwise it’s just a collection of meaningless words. The leadership team needs to consistently make decisions that optimize the mission over other objectives.
3. Is it simple? If you want employees to understand the mission, then it needs to be easy enough for them to repeat it to others.
4. Does it connect with employees? Every employee in an organization should feel connected to the mission; they should be able to see how they help deliver it every day.
5. Will it create value? Missions must define the value that the organization intends to creates for customers or other key stakeholders.

The bottom line: An inspiring mission is a sustainable competitive advantage.

Customer Experience Needs More Practical Wisdom

I recently watched a video of a TED speech by Barry Schwartz, the author of the seminal book The Paradox of Choice. His TED talk was called Our Loss of Wisdom. Wow! It’s a powerful speech.

Schwartz references what Aritstotle called “practical wisdom,” the combination of moral will and moral skill. He uses anecdotes about janitors at a hospital who alter their prescribed work routines in order to cater to the needs of patients and visitors. His key point is that these janitors believe that human interactions involving kindness, care and empathy are an essential part of their job, even though their job descriptions don’t mention anything about how they should treat other people. According to Schwartz:

“These janitors have the moral will to do right by other people. And beyond this, they have the moral skill to figure out what “doing right” means…. A wise person knows when and how to make the exception to every rule… A wise person knows how to improvise… Real world problems are often ambiguous and ill-defined and the context is always changing.”

My take: Great customer experience requires employees who exercise their practical wisdom. Unfortunately, as Schwartz discusses, companies tend to create bureaucracies that suppress practical wisdom.

There’s an outstanding article written by Sumantra Ghoshal in 2005 called Bad Management Theories Are Destroying Good Management Practices. Ghoshal describes how management practices operate on the assumption of Homo Economicus, a model of people as rational self-interest maximizers. This economic perspective leads to the belief that employees can’t be trusted to act on behalf of the firm and, therefore, controls must be put in place to align their efforts.

As a result, management interprets success and failure in the light of their controls. If things are working well, then the controls are seen as being successful, so more are added. If things are not working well, then it’s viewed as an insufficiency of the controls, so more are added. In all cases, more and more controls are piled on to employees.

In this environment, employees lack the empowerment to exercise practical wisdom.

As it turns out, companies can unleash practical wisdom by focusing on the four customer experience core competencies:

• Purposeful Leadership: Provides employees with a higher calling and permission for improvising.
• Compelling Brand Values: Provides employees with an understanding of the true goals of the organization and a framework for improvising.
• Employee Engagement: Provides employees with a reason to care about the company and its customers.
• Customer Connectedness: Provides insights into what customers really need and fuels empathy.

The bottom line: Organizations need to cultivate more practical wisdom

Hyatt CEO Talks Purposeful Leadership

In a speech at Wharton, Mark Hoplamazian, CEO of Hyatt Hotels said that future leaders need to listen, have clarity of purpose, and be authentic. In the speech, he discusses how a janitor at NASA described his job as “I’m helping to put a man on the moon.” Hoplamazian describes how everyone in the organization needs to have that same clarity of purpose:

“If people do get it, and it’s simple and powerful, then they’ll know how to apply themselves in order to deliver that“

My take: This short speech by Hoplamazian does a great job of describing the essence of purposeful leadership, one of Temkin Group’s four customer experience core competencies. While only 15% of large companies have mastered purposeful leadership, it’s still the highest scoring competency. Unfortunately for Hoplamazian, Hyatt hasn’t fully mastered all of the competencies, as it earned 9th place out of 12 hotel chains in the 2012 Temkin Experience Ratings.

If you want to gauge the commitment of Hoplamazian or any other leader, take this simple evaluation:

The bottom line: Purposeful leadership requires true commitment

Leadership Principles for Changing Corporate Culture

I just read a couple of articles about an important topic, corporate culture. The first one, The Rise of the Chief Culture Officer, describes how companies are appointing ”Chief Culture Officers.” Here’s an interesting quote from one of those new execs, Maria Gendelman, from North Jersey Community Bank:

I’m there to make sure that every single piece of paper that we give to the customer all looks the same, that our processes are efficient and streamlined — all of those things touch culture.

The other article is an interview with John Taft, CEO of RBC Wealth Management. Here’s what Taft says about culture:

Culture is everything when it comes to responsible, long-term business success… A leader’s job is to discover, communicate and reinforce culture. If you don’t get culture right, nothing else matters.

My take: Company culture is an integral component of long-term success with customer experience. In our recent research The State of CX Management, 2012, we found that one of the most significant things that distinguishes companies that are CX leaders from their peers is a heightened focus on culture.

Executives may be able to mandate a few activities within a company, but corporate culture determines just about everything else in one way or another. Leadership guru Arthur Carmazzi does a great job of describing the value of corporate culture in this quote that I used in the post Management Imperative #1: Invest In Culture As A Corporate Asset:

“The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.”

I talk about the intersection of culture and CX as Customer-Centric DNA, defined as:

“A strong, shared set of beliefs that guides how customers are treated.”

Here are some principles that execs should keep in mind about changing their corporate culture and building customer-centric DNA:

• People generally conform to their environment (see 6 Laws of Customer Experience: Employees do what is measured, incented, and celebrated). So pay very close attention to the environment that you are creating.
• Culture is very slow to move, because it often outlasts the senior executive team. Make sure you only attack the portions of the culture that you are truly committed to changing.
• The first step of changing corporate culture is to fully understand the existing culture. It is important to frame the change in terms of explicit contrasts between the current behaviors and the desired future behaviors.
• It’s likely that many of your existing leaders are reinforcing the current culture, in ways that they probably don’t even recognize. So changing your corporate culture will likely require some management turnover. As Pablo Picasso once said: “Every act of creation is first of all an act of destruction.”
• Any leader who wants to transform her organization needs to adopt the three characteristics of transformational leaders: Communicate “why,” model desired behaviors, and reinforce change.
• Use the 6 C’s of customer-centric culture as levers for change: Clear beliefs, constant communications, collective celebrations, compelling stories, commitment to employees, and consistent tradeoffs.
• Finally, I’m not a big fan of the Chief Culture Officer position. I’d like to see Chief People Officers (heads of HR) step up to the plate and integrate culture as a core component of their organization’s work. Without culture in mind, how effective can an HR organization be at recruiting, hiring, on-boarding, reviewing, compensating, training, promoting, and outplacing employees?!?

The bottom line: Are you focusing enough on your corporate culture?

Examining Apple Stores And Employee Engagement

In our Employee Engagement Benchmark Study, we found a high correlation between good customer experience and high levels of engaged employees. But many companies don’t understand this connection, which is why we’ve identified “Ignoring Employees” as one of the 10 CX mistakes to avoid.

Apple, however, seems to be avoiding this mistake. Customers tend to love their experiences with engaged employees in Apple stores. That’s why I thoroughly enjoyed this article in the New York Times a few weeks ago: Apple’s Retail Army, Long on Loyalty but Short on Pay. It provides great insight into Apple’s retail model.

So I decided to dissect the article and reconfigure parts of it into some key lessons…

Apple stores are sales machines. There’s no questioning the success of Apple’s retail efforts.

Last year, the company’s 327 global stores took in more money per square foot than any other United States retailer — wireless or otherwise — and almost double that of Tiffany, which was No. 2 on the list, according to the research firm RetailSails. Worldwide, its stores sold $16 billion in merchandise. Divide revenue by total number of employees and you find that last year, each Apple store employee — that includes non-sales staff like technicians and people stocking shelves — brought in $473,000. Electronics and appliance stores typically post $206,000 in revenue per employee, according to the latest figures from the National Retail Federation.

The brand is built on an army of hourly workers. Apple’s brand may be drawn-up and envisioned in Cupertino, but it comes to life through 10′s of thousands of relatively low-paid 20-year-olds. This phenomena is true for many companies. (see CX Law #4: Unengaged employees don’t create engaged customers.)

About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year.  By the standards of retailing, Apple offers above average pay — well above the minimum wage of $7.25 and better than the Gap, though slightly less than Lululemon, the yoga and athletic apparel chain, where sales staff earn about $12 an hour. The company also offers very good benefits for a retailer, including health care, 401(k)contributions and the chance to buy company stock, as well as Apple products, at a discount. But Cory Moll, a salesman in the San Francisco flagship store and a vocal labor activist, said that on Tuesday he was given a raise of $2.82 an hour, to $17.31, an increase of 19.5 percent and a big jump compared with the 49-cent raise he was given last year.

People seek out a higher purpose. Apple recruits people who love the Apple brand and provides them with a vision for their work that goes beyond selling products to “enriching people’s lives.” Companies need to identify this purpose and communicate it to employees.

But Apple’s success, it turns out, rests on a set of intangibles; foremost among them is a built-in fan base that ensures a steady supply of eager applicants and an employee culture that tries to turn every job into an exalted mission.“When you’re working for Apple you feel like you’re working for this greater good,” says a former salesman who asked for anonymity because he didn’t want to draw attention to himself. “That’s why they don’t have a revolution on their hands.”One manager said it was common for people offered jobs to burst into tears. But if the newly hired arrive as devotees, Apple’s training course, which can range from a few days to a few weeks, depending on the job and locale, turns them into disciples. The phrase that trainees hear time and again, which echoes once they arrive at the stores, is “enriching people’s lives.” The idea is to instill in employees the notion that they are doing something far grander than just selling or fixing products. If there is a secret to Apple’s sauce, this is it: the company ennobles employees.

Train for key customer moments. Apple examines the experience of customers and trains employees how to deal with these critical interactions. Companies need to understand interactions from the customer’s perspective. (see CX Law #1: Every interaction creates a personal reaction.)

Training commences with what is known as a “warm welcome.” As new employees enter the room, Apple managers and trainers give them a standing ovation. The clapping often bewilders the trainees, at least at first, but when the applause goes on for several lengthy minutes they eventually join in. There is more role-playing at Core training, as it’s known, this time with pointers on the elaborate etiquette of interacting with customers. One rule: ask for permission before touching anyone’s iPhone. “And we told trainees that the first thing they needed to do was acknowledge the problem, though don’t promise you can fix the problem,” said Shane Garcia, the one-time Chicago manager. “If you can, let them know that you have felt some of the emotions they are feeling. But you have to be careful because you don’t want to lie about that.”

Apple established an environment for good customer experience. You can’t just push people to deliver good customer experience, you need to  create an environment that encourages them to do so; people typically conform to their environment.  (see CX Law #5: Employees do what is measured, incented, and celebrated.)

At Apple, the decision not to offer commissions was made, Ms. Bruno said, before a store had opened. The idea was that such incentives would work against the company’s primary goals — finding customers the right products, rather than the most expensive ones, and establishing long-term rapport with the brand. Commissions, it was also thought, would foster employee competition, which would undermine camaraderie.

Sales and productivity goals are creeping in. Over time, every system tends to sway away from its initial design. While this may be appropriate, it often leads to competing metrics or to environments that encourage behavior that is inconsistent with the original brand goals.

He had already begun to sour on the job when in 2007, he said, his store began an attendance system whereby employees accumulated a point for every day they did not come to work; anyone with four points in a 90-day period was at risk of termination. “It was a perfectly good idea, but the thing that was terrible is that it didn’t matter why you couldn’t come to work,” Mr. Zarate said. “Even if you had a doctor document some medical condition, if you didn’t come to work, you got a point.”

To meet the growing demand for the technicians, several former employees said their stores imposed new rules limiting on-the-spot repairs to 15 minutes for a computer-related problem, and 10 minutes for Apple’s assortment of devices. If a solution took longer to find, which it frequently did, a pileup ensued and a scrum of customers would hover. It wasn’t unusual for a genius to help three customers at once. Because of the constant backlog, technicians often worked nonstop through their shift, instead of taking two allotted 15-minute breaks. In 2009, Matthew Bainer, a lawyer, filed a class action alleging that Apple was breaking California labor laws. Sales employees, Mr. Garcia and others noted, deal with stresses all their own. Though commissions are not offered, many managers keep close tabs on sales of warranties, known as Apple Care, and One to One, which is personal tutoring for a fee. Employees often had goals for “attachments” as these add-ons are called — 40 percent of certain products should include One to One, and 65 percent should include Apple Care.

Employee engagement requires an ongoing focus. Even companies that have string levels of employee engagement, like Apple, can’t rest on their laurels. It’s critical to track employee engagement and to respond immediately whenever it starts to deteriorate.

Like many who spoke for this article, Shane Garcia, the former Chicago manager, talked about Apple with a bittersweet mix of admiration and sadness. When he joined the company in 2007, he considered it a place, as he said, that “wanted you to be the best you could be in life, not just in sales.” Three years later, his work life seemed tense and thankless. He had little expectation that upper management would praise or even notice his efforts. In recent years, the level of unhappiness at some stores was captured by an employee satisfaction survey known in the company as NetPromoter for Our People. It’s a variation of a questionnaire that Apple has long given to customers, and the key question asks employees to rate, on a scale of one to 10, “How likely are you to recommend working at your Apple Retail Store to an interested friend or family member?” Anyone who offers a nine or 10 is considered a “promoter.” Anyone who offers a seven or below is considered a “detractor.” Kevin Timmer said the internal survey results last year at the Grand Rapids store were loaded with fives and sixes.

The bottom line: Don’t ignore employee engagement.

CX Mistake #1: Faking Executive Commitment

In this series of posts, we examine some of the top mistakes companies make in their customer experience management efforts. This post examines mistake #1: Faking Executive Commitment. It’s very easy for an executive to say that he or she is committed to customer experience, but it takes much more than words to drive sustainable change across an organization.

Without a strong level of executive commitment, companies can exert significant energy towards customer experience only to eventually fail. As a result, organizations revert back to their original behaviors without any sustained customer experience improvements, leaving behind a trail of unfinished efforts and frustrated, disheartened employees.

One of our 6 Laws Of Customer Experience is: You can’t fake it. Employees figure out what’s really important to their leaders and will eventually see through any veneer of commitment. Executives demonstrate their real priorities in their decisions and actions, the priorities they set, the trade-offs they make, and the way that they chose to spend their time.

Most organizations have a strong tendency to resist change. Since improving customer experience often requires changes across an organization, executive commitment is required to overcome the innate inertia.

Leaders, as it turns out, fall into one of five levels of commitment:

• Opposers don’t believe in customer experience. These executives generally won’t support customer experience efforts no matter what ROI data they see, but can become passives when they see strong support from their peers.
• Passives don’t really care about customer experience. These executives are willing to become toe-dippers if they see strong support from their peers.
• Toe-dippers are willing to offer some time and resources for customer experience. These executives will increase their participation and can even become supporters if they see strong business opportunities.
• Supporters are willing to give their resources to customer experience efforts and encourage their peers to do the same because they inherently understand the business value of these efforts. They use ROI results to strengthen their discussions across the company.
• Advocates fight any battle to make sure that customer experience efforts are funded. They generally understand the impact that customer experience has to the long-term competitiveness of the company without any project-based ROI data.

How can you gauge the actual commitment of your executive team? We’ve created a checklist of eight signs of executive commitment that help identify the actual commitment of an executive. Advocates demonstrate most of these items.

Here are some tips for avoiding this mistake:

• Communicate the four CX competencies. It’s easy for companies to think that they can make superficial changes and wind up with great customer experience. But it takes much more effort than that. Customer experience leaders can make sure that their senior execs understand the breadth of efforts required to build a customer-centric culture by explaining the four CX competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.
• Always refer to the journey. Customer experience change does not come overnight, so companies need to be prepared to hold their focus for several years. To help maintain this focus, try and frame your current customer experience efforts as part of a longer-term journey.
• Teach execs how to transform their orgs.Many times I find execs looking for advice on how to drive the charge, so here’s some to share. The leaders that are most effective at leading transformation demonstrate three key characteristics, they: 1) Communicate “why” (making sure their people understand the rationale for change), 2) model the desired behaviors (showing commitment in their actions), and 3) reinforce change (continuously looking for ways to overcome inertia).
• Locate a committed leader. While it will take the CEO and his/her staff to drive organization-wide change, individual operating units inside of organization can become more customer-centric. Look for a business unit leader who is truly committed and start the customer experience efforts in his/her organization. Success in that group can help to get other executives on board.
• Make the business case. Some execs may be committed based on their belief that customer experience is a critical component of their organization’s success.But they need to continuously make trade-offs and convince others to focus on customer experience. To help these execs stay on course, it’s very helpful to provide them with compelling business cases and anecdotes about how customer experience is generating positive business results.
• Appeal to the needs of senior execs.To fully engage senior execs, make sure to find ways to tap into their emotional needs. How do you do this? By focussing on two common areas: Their desire to be loved by customers (share direct negative feedback from customers) and their desire for greatness (paint a picture of how your efforts will help them make the company, and their legacy, great).
• Match ambition with commitment. If senior execs aren’t true advocates for customer experience, then don’t try and make significant changes. While initiatives may start out okay, they will likely stall when changes are required across multiple internal organizations. It’s important to realize that not every company can or should focus on customer experience transformation.

The bottom line: You just can’t fake real commitment

Temkin Experience Ratings Spotlight: USAA

Almost any discussion about companies that deliver great customer experience has to include USAA. The financial services firm that serves the military and their families earned industry-leading scores in credit cards and insurance in the 2012 Temkin Experience Ratings and in last year’s ratings as well.

In 2011, USAA consolidated all of its customer interaction groups into a single organization, Member Experience. Previously, USAA’s product businesses had their own sales and service arms. By bringing together all of those customer-facing groups, USAA hopes to deliver even more cohesive experiences to members.

To find out how this customer experience powerhouse approaches customer experience, I spoke with Wayne Peacock, Executive Vice President of Member Experience at USAA. Here is a synopsis of our Q&A:

1) What do you think makes USAA a perennial customer experience leader?

It comes down to our core DNA. We are a mission-driven organization. Everything we talk about is focused on helping military families with their financial security. Everyone in our organization has an intense focus on serving our members. It’s our true “North Star” that allows us to do things differently.

We also have a relentless corporate focus on delivering exceptional service and experiences for our members. We continuously look at opportunities to improve and innovate around serving members. There’s nothing exciting or sophisticated, we just stay true to our mission and core purpose all the time.

Every day, 200 thousand members call us and a passionate, empathetic employee tries to help them. At an atomic level, everything flows from those individual interactions and the other contacts that members have through our online channels.

We want to run a healthy financial business so we invest in our future, but our internal score keeping is clear and direct: our key objective is to help our members do better in life. It’s what we recognize and reward, and it manifests itself in how we hire and train our employees. We use the term “surround sound” to mean that we bring the needs of military to life throughout our organization. We hire a lot of ex-military, bring military members into the building, take employees to military installations so they can see and feel the real life situations of our members, just to name a few examples.

2) What things do you personally track to tell if USAA is veering even slightly off course?

We look at, and set a high bar, on metrics around member satisfaction, advocacy, and loyalty. We are not satisfied just weeding out defects. We examine what highly satisfied members are telling us so that we can replicate it across our organization. It’s about the decomposition of what we do well and what we don’t do so well to ensure that we stay on course.

I believe that you have to touch and feel the customer experience and have a sense for what’s going on. I spend my time, and I ask my leaders to spend a few hours a month, shadowing a front-line employee.  Sitting in a cubicle beside a rep  and listening to the member call through the headset. I am always asking people about their experiences with USAA.

Member satisfaction at a transactional level is our key metric. We measure it by product, geography, and channel and are working on a cross-channel measurement. We use a 10-point satisfaction scale and consider only the top-two boxes as acceptable scores. We examine problems for any score that is six or lower.

We are also  improving our social media listening.

3) What projects or initiatives at USAA are you most excited about in terms of its impact on future customer experience?

How we use insight to inform action is a critical competence that we need to be excellent at. And one of the underpinnings of that is analytics. I’m interested in emerging opportunities to bring big data into our environment–to use insight at the point of service or sales to direct that experience.

The single interchange between members and USAA is working every day but the ability to connect across those individual conversations is what we are working on. How do you link a conversation that might span over a month or two? And then how do we use behavior and analytics to shape the next conversation so we are relevant and personalized for what they want to do next?

We want to create experiences around what members are trying to accomplish, not just our products. If a member is buying a car, then we would historically see that as a change in auto insurance. We are changing that to an auto event – to help the member find the right car, buy it at a discount, get a loan, insurance, etc. and do that in any channel and across channels. There’s enormous value for members and for USAA if we can facilitate  that entire experience.

We are also continuing our journey around cross-channel experience. We are finding ways to allow customers to seamlessly move across channels and have us move with them, from marketing campaigns to sales and service at our Website, mobile apps, or contact center.

Mobile is also a key area of focus for us as the proliferation of mobile phones and tablets increases. We see mobile as a key entry point into USAA. We are working to digitize and miniaturize all of our business processes to be effective on a 3.5-inch screen. We’ve already built great capabilities  like deposit@mobile.  In the future, people are going to manage their lives through mobile devices. We want to establish a mobile-first mindset at USAA.

4) What advice do you have for customer experience executives at other companies that are leading transformation efforts in an attempt to become a customer experience leader like USAA?

Start with getting clear on the purpose of your organization. If you don’t have a true North Star, then you can’t get aligned.

You have to win the hearts and minds of your employees. Get the front-line people excited about what you’re doing and find a cadre of leaders that will buy into the vision and be advocates for the changes. Our front-line folks saw what we were trying to accomplish by aligning our member interaction functions into one organization; they saw how it would be beneficial to members and could provide additional career paths for them.

And remember to celebrate your early wins.

The bottom line: USAA wins through its unwavering purpose, member-centric culture, and a relentless desire to improve.

Customer Experience Reading List For Senior Execs

Our research shows that an increasing number of companies will focus on customer experience in 2012. So there will be a new cadre of senior executives beginning to learn about customer experience. As they gain interest, they’ll look for materials for getting up to speed. Here’s a short list of posts that I’d recommend sharing with these CX newcomers:

1. The 6 Laws Of Customer Experience. Every executive should understand these fundamental drivers of how organizations deliver customer experience.
2. 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.
3. My Customer Experience Manifesto Continues. Provides a perspective of how to think about customer experience management.
4. Customer Experience-Loyalty Connection. This report uses large-scale consumer research to show the link between customer experience and customer loyalty, good for understanding ROI.
5. What If Customer Experience Has No ROI?. This is a three-part post that explains the connection between customer experience and business results.
6. Customer Experience Affects Attitudes And Behaviors. Shows how customer experience links to business and brand strategy.
7. Three Characteristics Of Transformational Leaders identifies what leaders need to do if they want to drive change in their organizations.
8. Improve “Purposeful Leadership” In 2011. Gain a deeper understanding of the role that leadership plays in transforming customer experience.
9. The 8 Signs Of Executive Commitment. Gauge the commitment level of the executive team with this simple diagnostic.
10. The Customer Experience Checklist Manifesto. Use this checklist of eight items to make sure that investments will improve customer experience.
11. 8 Customer Experience Trends For 2011. These trends give a good sense of where things are heading, but keep an eye out for an updated list of megatrends.

If you can get your senior executives to spend 60 minutes reading through this material, then they should have a much better understanding about what it takes to build a more customer-centric organization. If they show some interest, then sign them up for the monthly CX Journal so they can continue on their learning journey.

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

IBM’s Success Highlights Four Questions For All Execs

In case you’ve missed it, IBM is a hot commodity; during 2011 its stock rose from $147/share to $184/share.

A lot of the credit has to go to Samuel J. Palmisano, who just stepped down as IBM’s CEO after nearly decade of leading the IT behemoth.

Mr. Palmisano led the company using a framework based on four questions. According to Palmisiano, these four questions were a way to focus thinking and prod the company beyond its comfort zone and to make I.B.M. pre-eminent again:

1. Why would someone spend their money with you — so what is unique about you?
2. Why would somebody work for you?
3. Why would society allow you to operate in their defined geography — their country?
4. And why would somebody invest their money with you?

Palmisiano used this approach to redefine IBM as a smaller, more profitable company by divesting businesses like PC and disk drives and acquiring PricewaterhouseCoopers Consulting among others.

My take: I like Palmisano’s questions; they point to an overarching theme: Value creation. I find that too many executives forget to ask themselves and their people about how they really create value. Even if they had a good idea of the answers to Palmisiano’s questions at one point in time, the world changes and they need to continue to ask — and answer — those four questions.

But there’s another key component to this type of framework: honesty. It’s tempting to view the world through the eyes of optimisim, but this gets in the way of good decision making. That’s why I often refer to a key lesson that I learned from Jack Welch during my days at GE:

“Deal with the world as it is, not how you’d like it to be“

The bottom line: Be honest: how will your company create value in the future?

Coach K Demonstrates Winning Leadership

Earlier this week, Michael William “Mike” Krzyzewski known as “Coach K” broke the record for the most wins by an NCAA division 1 basketball coach. Duke’s victory over Michigan State was Coach K’s 903rd win.

While there is a lot of celebrating around this lofty number, I think there is something more important that should be celebrated: How Coach K led his teams and all of the young men that passed through his program over his 30+ years at Duke. Coach K is a great leader.

To give you a sense of his leadership, here’s what a couple of his ex-players have to say about him:

“I played for the greatest college coach of all-time. It was an amazing journey.”
-Shane Battier

“It’s a dream to play for a guy like that — a guy who’s just a rock, who believes in you every second you’re on the court. I love Coach K. I’d run through a brick wall for him.”
-Jason Williams

Coach K’s style is to empower, challenge, and inspire his players. He recognizes that wins are the byproduct of a team performing at its best. To understand his leadership style, here’s an overview of his philosophy on teams:

“There are five fundamental qualities that make every team great: communication, trust, collective responsibility, caring and pride. I like to think of each as a separate finger on the fist. Any one individually is important. But all of them together are unbeatable.”

Here are other quotes from Coach K that are valuable for leaders in any field:

• “Communication does not always occur naturally, even among a tight-knit group of individuals. Communication must be taught and practiced in order to bring everyone together as one.”
• “Making shots counts, but not as much as the people who make them.”
• “When a leader takes responsibility for his own actions and mistakes, he not only sets a good example, he shows a healthy respect for people on his team.”
• “Too many rules get in the way of leadership. They just put you in a box . . . . People set rules to keep from making decisions.”
• “Mutual commitment helps overcome the fear of failure—especially when people are part of a team sharing and achieving goals. It also sets the stage for open dialogue and honest conversation.”
• “Goals should be realistic, attainable, and shared among all members of the team.”
• “Leaders should be reliable without being predictable. They should be consistent without being anticipated.”
• “A leader has to be positive about all things that happen to his team. Look at nothing in the past as failure.”
• “People want to be on a team. They want to be part of something bigger than themselves. They want to be in a situation where they feel that they are doing something for the greater good.”
• “During the season, your team should be led with exuberance and excitement. You should live the journey. You should live it right. You should live it together. You should live it shared. You should try to make one another better. You should get on one another if somebody’s not doing their part. You should hug one another when they are. You should be disappointed in a loss and exhilarated in a win. It’s all about the journey.”

The bottom line: Leadership is not about wins, it’s about helping your people become winners