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What The Heck Is Customer Experience? August 6, 2008

Posted by Bruce Temkin in Customer experience, Experience-Based Differentiation, Voice of the customer.
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One of the key problems with customer experience is that it’s not an “official” discipline like engineering and accounting. So it lacks a lot of rigor around processes and definitions. That’s why I still get a lot of people asking me questions like: “what exactly is customer experience?“

So, here’s my definition of customer experience:

The perception that customers have of their interactions with an organization

I’ve previously posted a definition for the perfect customer experience:

A set of interactions that consistently exceeds the needs and expectations of a customer

And I’d define customer experience management (CEM) as:

The discipline of increasing loyalty by exceeding customers’ needs and expectations

There are three key elements to the CEM definition:

  • Discipline. CEM is not about creating slogans like “this is the year of the customer.” It needs to be a set of ongoing activities like a well-established voice of the customer program.
  • Increasing loyalty. CEM is not about an altruistic belief that customers should be treated better. It needs to be linked to more profitable (or strategically improved) long-term behaviors of customers.
  • Customers’ needs and expectations. CEM is not about technology deployments or internal milestones. It needs to be calibrated from the perspective of target customers.

Now that we have some common definitions, it’s time to concentrate on the hard stuff: improving customer experience. And if you’ve been reading my blog, then you know what my recommendation is for that: Chart a path towards Experience-Based Differentiation (the blueprint for customer experience excellence) that conforms with the six laws of customer experience.

The bottom line: CEM is easier to define than to do.

86 Year-Old Chairman Still Talks To Customers May 27, 2008

Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Voice of the customer.
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There was an interesting article in the LA Times about Mercury Insurance chairman George Joseph’s view of service. It turns out that the 86 year-old Joseph (who’s net worth is more than $1 billion) receives eight or nine letters from customers each month and, in most cases, he calls the customer. Here’s what Joseph says about his actions:

You used to be able to pick up a phone and talk to people. That doesn’t happen anymore. Now there’s e-mail and automated switchboards. People want to talk to people. They want to talk to people who are knowledgeable and who can answer questions.

My take: There’s almost nothing more powerful than senior executives systematically talking with customers. I call this activity ”continuous listening,” which is one of the key levels in a voice of a customer program. When execs regularly speak with customers, three great things happen: 1) The execs keep grounded in what customers need and want; 2) those customers feel special and appreciated; and 3) other employees get a clear message that customers are important. 

The bottom line: There’s nothing better than some good old-fashioned customer experience.

Bank Of America Takes Comments, But What Is It Hearing? May 12, 2008

Posted by Bruce Temkin in Customer experience, Financial services, Voice of the customer.
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9 comments

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

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

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

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

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

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

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

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

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

What Is The Perfect Customer Experience? February 18, 2008

Posted by Bruce Temkin in Customer experience, Voice of the customer.
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I recently ran across a definition of “the perfect customer experience” in probably the perfect place to find it: The Perfect Customer Experience blog. Dale Wolf, the author, does a really nice job on the blog — you should check it out. His definition of the perfect experience was:

The perfect customer experience is one which results in customers becoming advocates for the company, creating referral, retention and profitable growth.

But, I felt like the definition was not quite right. So I posted the following comment on his blog:

The perfect customer experience is a set of interactions that consistently exceed the needs and expectations of a customer. While the outcome of delivering great customer experiences will hopefully turn many customers into advocates, I don’t think an experience is any less great if a customer keeps her satisfaction to herself.

Interestingly, Wolf’s response to my comment describes the differences between our definitions in terms of Net Promoter scores (NPS). Hmmm. I’m not sure that’s the way I would have summed up the differences. The whole point of my comment was to get people to recognize three unique things:

  1. The actual experience (the reality of what happened)
  2. The customer’s perception of the experience (how the customer views it relative to her needs and expectations)
  3. The customer’s reaction to the experience (what the customer does based on the experience)

The perfect customer experience relates to #2, the customer’s perception of the experience. The experience is no less perfect if the customer does not end up becoming an advocate (which is a part of #3 above).

I don’t think that it’s valuable to define the world of customer experience in terms of NPS. It’s not that I dislike NPS, I just want companies to think about it in the context of an overall voice of the customer program.

The bottom line: In terms of figuring out the perfect definition of perfection, I think Yogi Berra said it best: “If the world was perfect, it wouldn’t be.”

Best Buy Wants A Better Buy (ing experience) December 1, 2007

Posted by Bruce Temkin in Customer experience, Online strategy, Store/branch strategy, Voice of the customer.
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In Forrester’s Customer Experience Index, 2007, Best Buy was ranked #34 out of 112 firms — and 23rd out of 27 retailers on the list. That’s clearly not the best buying experience. But Best Buy is doing something about it.

In a recent press release from Best Buy, the retailer described what it had learned from a phone survey of 1,008 consumers. Here’s an excerpt…

… the factors consumers consider very or somewhat important include the return policy (92 percent) and the ability to speak to someone live when calling the store rather than hearing an automated message (91 percent). Other important elements include: customer assistance to help throughout the store (89 percent) and a helpful, easy-to-use Web site (70 percent).

In response to this insight, Best Buy also announced some new initiatives like:

  • Converting 30% of its floor personnel to a new position called ”Customer Assistant” that are cross-trained to help customers across all categories in the store and will work with “BlueShirts” who have deep knowledge in specific categories. 
  • Extended return policy that allows anything purchased after November 4th to be returned by January 31st. Best Buy hopes to remove the stress of holiday gifting by defining a specific date instead of a specific window (e.g., 14 days from purchase).
  • More Spanish language content in its Website (see BestBuy.com/espanol), in its call centers, and multilingual sales associates and signage in some stores. It is also adding Spanish language gift cards.

My take: You can always learn a lot from asking customers what they need, like, and want (which is why I push firms to develop a solid voice of the customer program). I’ll bet that many retailers would find that their customers want the same type of things as Best Buy customers – a clear return policy that works for holiday gift-giving, access to helpful employees, and an easy-to-use Website. Why not give it to them?!?

The bottom line: Your customers deserve the best buying experience.

Lessons Learned From Chief Customer Officers October 14, 2007

Posted by Bruce Temkin in Chief customer officer, Customer experience, Customer experience measurement, Customer-centric DNA, Executive leadership, Voice of the customer.
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I just published a report called the “The Chief Customer/Experience Officer Playbook.” To research the report, I interviewed executives with responsibility for customer experience that cut across normal product and/or channel boundaries (we call them Chief Customer/Experience Officers or CC/EOs) from several different organizations including Air Transat, Alaska Air Group, Bank of America, Bombardier, the California State Automobile Association, Century Furniture, the Colorado Rockies, and Symantec. In addition, I spoke with Jeanne Bliss, author of the book Chief Customer Officer: Getting Past Lip Service to Passionate Action.

The research identified five categories of things that CC/EOs should do:

  1. Make sure that you’ve got the right environment.
  2. Prepare to take on a broad change agenda.
  3. Establish a strong operating structure.
  4. Kick off high-priority activities.
  5. Look ahead to the future.

The report goes into much more detail for each of these items. While I can’t share the whole report in my blog (that’s reserved for Forrester clients), I did want to share some of the most interesting quotes from the CC/EOs:

  • “It takes massive support from senior management. This role can destruct careers.”
  • “What’s more important, but less tactical and takes longer, is the realization that customer experience is culture. It’s the mindset of our associates and their empowerment. Not stuff, but attitudinal. We’ve recognized that this is a journey.”
  • “Each of the groups in our company already had some customer experience efforts, so I wanted to make sure that they were on board and not threatened. I needed to talk to each of those groups individually. It’s an ongoing issue - and it’s an ongoing effort for me.”
  • “We focus on employees first. Happy employees make a happy customer. They were very skeptical - so much of our communication is internally driven. We need to support the hell out of them.”
  • “I do a read out to the leadership team every month and tell them my perspectives on how we’re doing (fact-based); a no-holds-barred discussion. No attempt to keep any of that stuff under the rug.”
  • “Customers want one relationship with us and we’ve given them about 10. Our data sources and systems are isolated; the organizations are isolated. We’re trying to break down the silos.”
  • “We’re changing metrics in the call center to eliminate focus on average talk time.”
  • “If I did it over again, I would have focused earlier on consolidating our customer listening posts and voice of the customer efforts. We now look at the perception of reliability, not the actual reliability.”
  • “We’re looking for line of site between our initiatives and NPS, which is a lagging indicator. We’ve worked on projects that have taken three quarters to improve the NPS.”

The bottom line: CC/EOs shouldn’t “own” customer experience, but they can really help support the organizational transformation required to improve it.

“LIRM” More About Net Promoter vs. Satisfaction July 26, 2007

Posted by Bruce Temkin in Customer experience, Voice of the customer.
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Well, it looks like my post on Net Promoter ignited some passionate debate — take a look at the comments posted on this blog if you’re interested. As this battle continues on, I want to make sure that people keep their eye on the toughest part of implementing any relationship tracking system — whether it’s based on Net Promoter, satisfaction, or some other measure. 

My suggestion: “LIRM.“

“LIRM” (from my report Building Your Voice Of The Customer Program) represents the elements firms need to put in place to make any voice of the customer program effective. The acronym stands for:

  • Listen. All components of a VoC program need clear mechanisms for capturing everything from customers’ perspective on specific interactions to their satisfaction with the company.
  • Interpret. Customer feedback needs to be examined by asking questions like “Is the issue we’ve uncovered isolated or systemic?” And “Where in our organization can we best deal with this situation?”
  • React. For each component of a VoC program, firms need explicit processes for making changes throughout the organization - based on what is learned from customer insights.
  • Monitor. As with any well-run corporate program, each component of a VoC program needs automatic feedback loops that track work plans and results.

The bottom line: When it coms to this Net Promoter debate, listen and LIRM.

Net Promoter And Satisfaction Battle For King Of The Ring July 6, 2007

Posted by Bruce Temkin in Customer advocacy, Customer experience, Customer experience measurement, Customer loyalty, Voice of the customer.
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Let’s start with a confession: I’m a big professional wrestling fan; so I really enjoy a good battle. One thing that I’ve learned from the WWE, is that it’s the storyline that makes a battle come to life. And the Net Promoter vs. Satisfaction debate has all of the story trappings of a great tag team match!

One one side of the ring in the blue trunks is the tag team of Fred Reicheld, ”father” of the Net Promoter System (NPS) concept and Satmetrix Systems, implementor of NPS-based survey systems. On the other side of the ring in the red trunks, we find Claes Fornell, ”father” of the American Customer Satisfaction Index (ACSI) and ForeSee Results, implementor of ACSI-based survey systems.

Both of these teams are fighting for their approach to be recognized as “THE” measure for tracking customer relationships. To put this into perspective, this type of measure represents only one of the five levels of a voice of the customer program (see my earlier post on voice of the customer programs).

Let’s start by handing out some awards to the teams:

  • Best marketed: Net Promoter (Reichheld is very good at touting his concept — and in writing compelling books about it)
  • Most mature: Satisfaction (The ACSI has been tracking data since about 1994 and satisfaction has been around as long as I can remember)
  • Most quantitative: Satisfaction
  • Sexiest: Net Promoter (it’s caused a lot of hooplah)

Net Promoter has gained a lot of momentum over the last few years as many large companies have adopted it. The methodology is pretty straightforward: ask people if they’d recommend your firm. Based on their response, they get categorized as a Promoter, Detractor, or neither. You take the percentage of Promoters and subtract the percentage of Detractors and that leaves you with a Net Promoter percentage.

This debate was enhanced by a recent study cited in the Journal Of Marketing which found that…

Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.

Well, if you’re wondering what I really think about this Battle Royale, then here it is. Just like wrestling – the storyline is much more exciting than the reality of the battle. Here’s my take on the contest:

  • Net Promoter is not the “ultimate” measure for a customer relationship
  • Then again, neither is satisfaction.
  • But companies are better off when they have more satisfied than dissatisfied customers and more Promoters than Detractors.

My recommendations:

  • Don’t expect any single measure to be eutopia. Both measures are good, but neither one has enough information to fully guage customer relationships and to provide enough diagnostic information to make all of the necessary improvements.
  • Focus on one measure to build alignment. Picking a single measure to focus on (whether or not it’s perfect) can be very valuable in aligning the organization. If you can get your entire company focused on either raising satisfaction or increasing the number of Promoters, then you will likely see some significant improvements in the reallt important metrics: retention, sales, etc. So, if in doubt, pick one and move on.
  • Evolve your metrics over time. The previous two bullets may seem to contradict each other, but they don’t when you look at it over time. The value from locking into a single measure like Net Promoter is as much from aligning the organization as it is around the perfection of the metric. But after the organization gets aligned, firms will need to build out the portfolio of metrics — and find out for themselves which measures are both predictive and diagnostic.
  • Look at Customer Advocacy. The ring was too crowded to add another contestant to the match earlier in this post, but for some industries we’ve found another measure that is a powerful indicator of loyal customer behavior. So, in the purple trunks is Customer Advocacy, the perception that the firm does what’s best for customers, not just what’s best for its own bottom line. We strongly recommend that financial services and healthcare firms take a very close look at this measure.

The bottom line: Don’t get too caught up in determining the winner of this battle. Just make sure that you do something and are prepared to learn and evolve over time.

If you’re a client of Forrester, then I also recommend that you read these two research documents:

Are you listening to the voice of the customer? July 3, 2007

Posted by Bruce Temkin in Customer experience, Customer experience measurement, Executive leadership, Voice of the customer.
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Voice Of The Customer (VoC) is a term that many people use, but few people can define. That’s the type of environment in which I love to do research. So I ended up writing two research documents on the topic: Building Your Voice Of The Customer Program and Voice Of The Customer: Five Levels Of Insight (as always, only Forrester clients can read the full reports). To start with, I developed the following definition for a VoC program:

A systematic approach for incorporating the needs of customers into the design of customer experiences  

This definition contains three key elements:

  • A systematic approach. Most companies take an informal approach to gathering customer feedback. A VoC program should augment — not replace — those ad hoc approaches with a more structured way to gather and use customer insights.
  • Customer needs. Companies often have access to a great deal of customer data — but customer insights don’t automatically surface from data. A good VoC program uncovers the current and emerging needs of key customers — and helps identify areas where those needs are not being met.
  • Experience design. Gathering customer insights is only an interim step to improving customer experience. Why? Because VoC programs deliver the most value when companies actually make changes to better serve the customer needs uncovered by the research.

My research also identified five distinct levels of activities in a VoC program:

  1. Relationship tracking. Organizations need to track the health of customer relationships over time. That’s why companies often ask customers to fill out surveys — typically quarterly or annually — about their perception of the firm. Using this feedback, companies can create metrics that are simple to understand and easy to trend. Why is this important? Because an easy-to-grasp report card helps align everyone in the organization around a common purpose.(Note: I won’t get into the debate between “satisfaction” and “NetPromoter” metrics in this post, but I’ll definitely be touching on that in the future)

  2. Interaction monitoring. Every customer interaction — from an online transaction to a call into the call center — is important. Firms need a way to monitor how effectively they handle these customer touches. That’s why many companies do post-interaction surveys — asking customers for feedback on recent interactions.

  3. Continuous listening. Structured feedback through customer surveys provides enormous opportunities for analysis. But one of the strengths of these approaches — providing data — is also a limitation. To avoid this data-only view of customer relationships, companies put in place processes for executives to regularly listen to customers. There are many opportunities to hear what customers are saying, such as listening to calls in the call center, reading blogs, reading inbound emails, and visiting retail outlets.

  4. Project infusion. The following statement is probably not too controversial: Projects that affect customers should incorporate insights about customers. Despite the clear need for this type of effort, many companies lack a formalized approach for infusing customer insights into projects. To make sure that this doesn’t happen, some firms are incorporating customer insight steps in the front-end of their Sigma processes. 

  5. Periodic immersion. Every so often, it’s valuable for all employees — especially executives — to spend a significant amount of time interacting directly with customers or working alongside frontline employees. These experiences, which should be at least a half day, provide an excellent opportunity for the company to question the status quo.

 Here’s a graphic that shows more details on the five levels… Five Levels Of A Voice Of The Customer Program

 

Hopefully this helps to create some common language around the Voice Of The Customer.