The Customer Experience Shift From Centralized To Federated

In the report, The Federated Customer Experience Model, we discuss the direction that mature CX organizations will eventually go in—distributing CX capabilities across the organization.  It’s built on three components: CX Centers of Excellence, Enterprise CX Coordination, and Distributed CX Skills and Mindset.

Federation is not just a path for customer experience, it’s a common path for successful transformation within large organizations. Here’s why:

• Changing an organization requires a concerted effort to define the desired end state, and to align the resources and commitment to drive change. This requires a centralized model.
• Embedding behaviors in an organization requires distributed capabilities and beliefs, which needs to be disbursed and cultivated. This requires a federated model.

The bottom line: Centralized CX success leads to federated sustainability.

Customer-Centric Culture Change (Video)

Our research and work with clients show that customer experience is a reflection of an organization’s culture. Any company that wants to build sustainable customer experience must build a customer-centric culture. How? By mastering Employee-Engaging Transformation.

Want to know more? Watch this short video:

The bottom line: CX success almost always requires culture change

Comcast Needs To Trim Its Customer Experience Action Plan

A few months ago, The Consumerist leaked Comcast’s 10 point Customer Experience Action Plan.

1. Never being satisfied with good enough
2. Investing in training, tools, and technology
3. Hiring more people … Thousands of people
4. Being on time, every time
5. Get it right the first time
6. Keeping bills simple and transparent
7. Service on demand
8. Rethinking policies and fees
9. Reimagining the retail experience
10. Keeping score

My take: As you probably already know, Comcast has terrible customer experience. It’s consistently one of the worst companies in the Temkin Experience Ratings. So I have to start by applauding the leadership team for taking the problem seriously, and putting together a plan.

But the plan is flawed. I’ve already commented on Comcast’s mistaken plan to hire 5,500 new people, which is item #3. The 10 items collectively read like a laundry list of things, instead of a coherent approach and commitment to change the overall culture of the company (see the video, Driving Customer Experience Transformation, Made Simple).

The initial item “Never being satisfied with good enough” falls flat for an organization that is rarely good enough. How does that resonate with the pain that its customers regularly feel?

And the last item “keeping score” is also a red flag. Having and touting a customer experience metric is quite different from using it to drive change. We found that while more than half of the large companies describe themselves as “good” at collecting CX metrics, less than 20% are “good” at making trade-offs between financial metrics and CX metrics.

What do I recommend? Comcast should narrow its focus and make a commitment to be better at a few things that will make a huge difference for customers. Here’s what I suggest:

1. Being on time, every time
2. Get it right the first time
3. Keeping bills simple and transparent

If Comcast can do these things, then its customer experience will improve dramatically. As a matter of fact, if it just gets it right the first time, then I’d expect to see it jump out of the bottom of the Temkin Experience Ratings.

The bottom line: Commitment to a few things is better than a list of many

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.

The Current State Of Customer Experience

We just published a new Temkin Group Insight Report, The Current State Of Customer Experience. This report, which is based on a survey of 140+ large North American companies, provides insights into the progress that companies are making on their customer experience journeys.

It looks at topics like the adoption of voice of the customer (VoC) programs and Net Promoter Scores, the use of social media activities, and the goals, obstacles, and ambitions for customer experience. Here’s the executive summary:

Using the Temkin Group customer experience competency model, we found that only 3% of firms were “Customer-Centric Organizations” while 33% of firms were “Customer-Oblivious Organizations.” While companies rated highest in the area of Purposeful Leadership, only 16% received “very good” ratings in that competency area. This data highlights that companies are still in very early stages of customer experience maturity. We expect the results to improve over time; as 65% of respondents want to be customer experience leaders within three years.

Download report for $195

The report has 20 figures; with lots of data. Here are some interesting factoids:

• Only 16% think they always or almost always delight customers getting customer service online.
• 95% want to improve profitability, but only 43% want to improve the work environment for employees.
• 37% have had a customer experience leader for at least 12 months
• 71% identified “other competing priorities” as a significant obstacle to their customer experience efforts; the most commonly selected of the 11 obstacles we asked about.
• 57% have a formalized voice of the customer (VoC) program
• 45% that have a formalized VoC program tie compensation to customer feedback scores; one of the 15 VoC activities we asked about.
• 32% have been using Net Promoter Score (NPS) for at least 12 months; 19% are not familiar with NPS
• 31% analyze conversations in social media sites like Facebook and Twitter; the most commonly used of 11 social media activities we asked about.
• The customer experience competency assessment showed a wide range of results across the 20 questions:
  • Highest scoring: Senior executives regularly communicate that customer experience is one of the company’s key strategies
  • Lowest scoring: Marketing does as much brand marketing inside the company as it does outside the company

In addition to the data insights, the report has a number of self-assessment tools that you can use to compare your efforts to the 140+ respondents:

• In the Temkin Group Insight Report, The Four Customer Experience Core Competencies (free download), we introduced an assessment tool for our competency model. This report allows you to compare your results with 140+ other companies.
• A tool for gauging your voice of the customer (VoC) activities
• A tool for gauging your social media activities

Download report for $195

The bottom line: Customer experience management is still immature

The Four Customer Experience Core Competencies

Go to the updated version of this report

 

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

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

Here’s the executive summary of the report:

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

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

The bottom line: Start building your customer experience competencies

The Who And What Of JetBlue

I recently spoke at Allegiance’s customer event in Deer Valley, UT. One of the other keynote speakers was Vicky Stennes, VP of In-Flight Experience at JetBlue. Stennes described how the following JetBlue values define “who” the company is:

• Safety
• Caring
• Integrity
• Fun
• Passion

She also discussed how the JetBlue Experience is “what” the customers see. These experiences are driven by the atitude of its employees, what Stennes called “Jetitude.” She listed five behaviors that define “Jetitude:”

• Be in Blue always
• Be personal
• Be the answer
• Be engaging
• Be thankful to every customer

One of Stenne’s anecdotes showed JetBlue’s well-developed understanding of customer experience.  When the company designed it’s new T5 terminal in JFK airport, the airline invested in cushioning the security area to make it more comfortable for TSA agents. Why? Happier agents are more likely to deliver a good experience to customers.

My take: JetBlue operates consistently with my 6 Laws of Customer Experience, especially the 5th law: “Unengaged employees don’t create engaged customers.” It’s impossible to deliver a consistently high level of customer experience if you don’t:

• Recognize the importance of your employees
• Define the behaviors that reflect your brand (who you are as a company)
• Hire employees that are most likely to demonstrate those behaviors
• Invest in training and tools that help employees demonstrate those behaviors
• Measure, incent, and celebrate those behaviors

The bottom line: Most companies could use more Jetitude

The Container Store CEO Engages Employees

I often reference The Container Store when discussing the 3rd principle of Experience-Based Differentiation: Treat customer experience as a competence, not a function. Why? Because the retailer heavily invests in its people. Every one of its first-year, full-time salesperson receives about 241 hours of training—in a retail industry where the average is about seven hours. That’s more than 30x the industry average… amazing!

So I really enjoyed a recent interview with Kip Tindell, CEO of The Container Store in the New York Times. He discussed two of the company’s seven foundation principles:

Communication is leadership. So we believe in just relentlessly trying to communicate everything to every single employee at all times, and we’re very open.

One great person could easily be as productive as three good people. One great is equal to three good. If you really believe that, a lot of things happen. We try to pay 50 to 100 percent above industry average.

In addition to these principles, here are some of the other “gems” from Tindell:

We believe that we’re trying to build sort of a mutually interdependent group of stakeholders made up of the employees, the customers, the vendors, the community — and all of those people are interdependent and balanced

We’re big on what we call the whole-brain concept, which is simply trying to eliminate silos. So we probably have more people than we need in each meeting, and we don’t believe that’s unproductive

Also, probably 85 percent of our top leaders are women. I don’t want to get into a generalization here, but guess who tends to communicate the best?

We just beg and plead and try to get employees to believe that intuition does have a place in the work force. After all, intuition is only the sum total of your life experience. So why would you want to leave it at home when you come to work in the morning?

My take: One of my 6 Laws Of Customer Experience is that “Unengaged employees don’t create engaged customers.” The Container Store appears to fully understand what many companies don’t even recognize: Customer experience is inextricably linked to employee experience. But it’s not about an altruistic commitment to employees.

By focusing on employees, companies can establish what I’m calling the Employee Experience Virtuous Cycle where they end up with more loyal customers, stronger financials, and more engaged employees.  

 

The bottom line: Has your company established this virtuous cycle?

Costco, Newark, and NC On Leadership

Before getting on my flight to Madrid, I picked up U.S. News & World Report. It’s not my typical in-flight reading, but the topic caught my attention: America’s Best Leaders 2009. Here were a few of the highlights from the issue:

• Jim Sinegal, CEO of Costco, shared his view on employee engagement:
  • “We try to give a message of quality in everything we do, and we think that that starts with the people. It doesn’t do much good to have a quality image, whether it’s with the facility or whether it’s with the merchandise, if you don’t have real quality people taking care of your customers.”
• Corey Booker, Mayor of Newark, shared advice that he follows:
  • “My mom used to say that who you are speaks so loudly that I can’t hear what you say.” Also look at a previous post with this quote from Booker: “Life is about focus. What you focus on, you become. If you focus on nothing, you become nothing.
• Roy Williams, head coach of North Carolina, listed his three guiding leadership principles:
  • “(1) Everyone on the team must focus on the same goal. It’s my job to effectively communicate those goals to the team; (2) Emphasize those goals every day; and (3) Understand that although everyone has a common goal, individuals also have goals, needs, and dreams that must be cared for.”

The bottom line: These are great leadership lessons to follow.

Inside Ritz-Carlton’s Customer-Centric Culture

I just read an interesting interview in Forbes with Simon Cooper, president of the Ritz-Carlton, who provides some insight into Ritz-Carlton’s customer-centric culture. Here are some of Cooper’s remarks:

• We focus on three fundamentals. First, location–making sure we get absolutely the best location. Second, product–building the right physical product for what our guests want today and what they will want tomorrow. That’s the platform. Third, people–our ladies and gentlemen serving ladies and gentlemen. They animate the platform.
• We use what we call “lineup,” which is a Ritz-Carlton tradition… we want every single hotel, everywhere in the world, every partner, every shift, to utilize lineup, which typically takes around 15 minutes every day…That is a wonderful training and communication tool, where every department layers on the department message.
• Part of the lineup everywhere around the world is a “wow story,” which means talking about great things that our ladies and gentlemen have done.
• We entrust every single Ritz-Carlton staff member, without approval from their general manager, to spend up to $2,000 on a guest. And that’s not per year. It’s per incident… The concept is to do something, to create an absolutely wonderful stay for a guest.
• A culture is built on trust. And if leadership doesn’t live the values that it requires of the organization, that is the swiftest way to undermine the culture.

My take: As you may remember, I wrote about my less-than-ideal experience at the Ritz-Carlton in Puerto Rico. After I wrote that post (and complained at the front desk), one of the managers called me, apologized for our problems, and offered us a free dinner in the hotel’s nicest restaurant. It was a great meal; and it created a positive impression of the hotel.

As you can see from Cooper’s remarks, this type of customer-centric behavior is no accident. Ritz-Carlton empowers its “ladies and gentlemen” to deliver great experiences for customers. To get a better sense of how this hotelier operates, take a look at the Ritz-Carlton Gold Standards.

If you want to develop a customer-centric culture, here are some additional posts that should help:

• 6 C’s Of Customer-Centric DNA 
• Free Book: The 6 Laws Of Customer Experience
• Management Imperative #1: Invest In Culture As A Corporate Asset 
• Execs Need To Focus More On Culture 
• Tesco Showcases Strategy + Culture 
• Discussing Zappos’ Culture With Tony Hsieh 
• Joie de Vivre Engages Employees And Everyone Wins

The bottom line: A customer-centric culture takes purposeful leadership.

The Physiological Power Of Storytelling

One of the key topics I write about is corporate culture.  It’s such an important area that the first item on my list of The 6 New Management Imperatives is: “Invest in culture as a corporate asset.” It turns out that storytelling is one of the key levers for affecting corporate culture.

There are actually some physiological reasons why storytelling is important. I just read an interesting blog post that talks about the research of Marco Iacoboni, Professor of Psychiatry and Biobehavioral Sciences at UCLA. One of the key insights is that

People relate to stories because it is part of their evolutionary makeup. Stories cause our mirror neurons to fire at similar experiences, helping us remember and relate

The more that people can recognize themselves in a story, the more it will draw them into the content. So great communicators need to create narratives that relate to the people who they want to influence. The blog post goes on to explain that storytelling was a key part of President Obama’s success. As an example, take a look at this segment from one of his speeches (think about how many people can relate to these words):

There’s not a liberal America and a conservative America; there’s the United States of America. There’s not a black America and white America and Latino America and Asian America; there’s the United States of America.

The bottom line: Great storytelling can help change corporate culture

It’s Time To Engage Your Employees

As I was catching up on my reading, I ran across an article in BusinessWeek that discusses research from Gallup showing that less than 30% of the corporate workforce is truly engaged in its work. Why does this matter? The article points to some findings at Best Buy:

For every one-tenth-of-a-point increase in employee engagement, each Best Buy store increased profits by $100,000 a year.

My take: Less than one-third of employees are engaged in their work. Wow, that’s a huge opportunity! Companies that are looking to build more loyal customers need to look at their employees first. As I discuss in my eBook The 6 Laws Of Customer Experience: Unengaged employees don’t create engaged customers. Companies trying to improve the customer experience without figuring out how to engage the other 70% of their workers will likely fail.

That’s why I like what Alaska Airlines did with its North Of Expected campaign. Even with the backdrop of a difficult economic environment, the airline seized the opportunity to energize its workforce. Prior to rolling out its external marketing campaign, the company spent 10 weeks on an internal campaign called “Be North Of Expected” that engaged employees in Alaska Airline’s heritage of good customer service.

The bottom line: Employee engagement is a required path to customer loyalty

Use Storytelling To Define Your Culture

Stories are a critical component of corporate culture. That’s why one of my 6 Cs of customer-centric DNA is “Compelling Stories.” Author Philip Pullman once said: 

‘Thou shalt not’ is soon forgotten, but ‘Once upon a time’ lasts forever.

So I was intrigued when I found a story called “Telling Tales: The art of corporate storytelling” in a 2007 edition of a magazine for Costco’s members.

The article offers-up advice for developing your corporate stories, which I’ve refined into these five items:

• Identify what stories you want; select key elements of your culture.
• Craft powerful stories; look for good stories and then write them down and perfect them.
• Use an employee’s name; specificity is good and it helps boost morale.
• Keep it short; if it’s too long, it’s hard to remember and repeat.
• Use and re-use the story; don’t be shy in retelling the story.

One word of caution: Make sure you’re being honest. The stories will only work if they reinforce actual pieces of your culture. So you need top be clear about how your company operates. As Jack Welch is known for saying: Deal with the world as it is, not how you’d like it to be. 

The bottom line: Tell stories with a purpose

Will Amazon.com Kill Zappos’ Core Values?

Amazon.com just purchased Zappos, an up-and-coming online-centric shoe retailer, for $928 million. That’s right, Amazon.com spent nearly $1 billion on a company that earned only $40 million in 2008. Wow!

My take: I’ve been a big fan of Zappos, often writing about the company in this blog. As a matter of fact, my interview with Zappos CEO Tony Hsieh was one of my favorite research interviews over the past few years.

The company was built around, and maintains, a very strong customer-centric culture. At the cornerstone of its culture are Zappos 10 core values:

1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

Hsieh told me that he hires, fires, and promotes people based on their embodiment of these values.

Hsieh has done a great job of embracing one of the 6 new management imperatives that I’ve defined called Invest in culture as a corporate asset. At the end of the day, Zappos’ key asset is its culture.

Amazon.com obviously expects to get more than $40 million in annual earnings for its $1 billion. If it’s looking for much faster growth, significantly more profitability, or a rapid expansion across categories, then how will these goals affect Zappos’ fanatical focus on in it’s 10 core values?

I hope that Zappos’ culture survives.

The bottom line: Will the Zappos culture thrive or die at Amazon.com?

The Yellow Brick Road To Customer Experience Maturity

I’ve written about how my opening keynote speech at Forrester’s Customer Experience Forum was based on Dorothy’s journey in The Wizard Of Oz. Given the story that I was telling, I presented the five stages of customer experience maturity as a yellow brick road.

As part of the discussion, I highlighted two components for each stage: 1) key focus and 2) cultural change. Since this part of my speech spanned several slides, I created this single graphic to capture the key content for my blog.

The bottom line: It’s time to map out your trip along this yellow brick road.