The CEO’s (Key) Role In Customer Experience

I recently discussed Ken Thompson’s impact on the customer experience at Wachovia. That post highlighted this excerpt from his “letter to shareholders” in Wachovia’s 2004 annual report as a blueprint for CEO’s who want to transform their company’s customer experience:

Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.

The power of these words may have been dampened by the length of the excerpt, so I dissected it into components that are critical for CEOs…

“Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality.”

=>Insight for CEOs: The focus on customer experience (or, as it is called here, service quality) must come from the CEO’s clear belief that it impacts business results (in this case, retention). It is a core business imperative, not a “nice to have” initiative.

“We increased staffing levels in our financial centers, call centers, and operations area.”

=>Insight for CEOs: Since customer experience provides real financial benefits, it’s worthy of investment. And the CEO’s willingness to invest in these areas is a clear signal to the organization that customer experience excellence is critical; not just an empty slogan.

“We revised our incentive compensation plans to emphasize not only sales performance, but service as well.”

=>Insight for CEOs: People focus on what’s measured, incented, and celebrated. To embed customer experience within the core operating fabric of a company, therefore, firms need to refine what it measures, incents, and celebrates. So make sure that your HR exec is involved in the customer experience effort.

“We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly.”

=>Insight for CEOs: Any customer experience transformation needs to be driven by the voice of the customer; so CEOs should look for a customer experience dashboard with a handful of customer metrics (like satisfaction or Net Promoter). And hold your entire executive team accountable for improving those metrics; don’t offload the responsibility to a chief customer officer.

“And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.”

=>Insight for CEOs: This effort requires the active involvement and commitment by the CEO. Why? Because transformation efforts can easily get bogged down in politics and silos. So reviewing progress of the firm’s customer experience efforts needs to become a regular part of the executive agenda.

The bottom line: Customer experience success requires CEO nurturing.

A Look Back At My First Year Of Blogging

1st Year Aniversary For Customer Experience Matters

Today is a big day. It’s exactly one year after my first post “Lessons Learned From 1,001 Web Site Reviews.”

It’s hard for me to believe that I’ve been doing this for a whole year. Or as the song from Rent goes, for five hundred twenty five thousand six hundred minutes. But my measurement is not in daylight, sunsets, midnights, or cups of coffee. It’s in blog posts, 184 of them!

While blogging takes a ton of time (I’m constantly looking for interesting topics and drafting posts), it’s been a great experience. Why? Because of you! Readership continues to grow and this blog now has more than 10,000 visitors per month. So I want to say thank you to everyone who has been reading, linking to, writing about, and passing along my blog.

In honor of the 12 months of blogging, I’ve picked out 12 of my favorite posts (in no particular order):

  • Experience-Based Differentiation. This is the core idea which drives my research; it also  won the best research award at Forrester. Experience-Based Differentiation, or EBD as I fondly call it, is based on three principles: Obsess about customer needs, reinforce the brand with every interaction, and treat customer experience as a competency. This remains a powerful blueprint for customer experience excellence. If you’re interested in customer experience (who isn’t?!?), then you may want to use the EBD self-test as a starting point. You can also find many other posts about EBD on this blog.
  • My Manifesto: Great Customer Experience Is Free. This post summarizes my perspective on customer experience; it’s a lot like the quality problems of the 1980s. While customer experience is not an easy situation to deal with, it can DEFINITELY be improved with a systematic effort; it just takes discipline (see EBD above). There was also a follow-on to this post called Great Customer Experience Is Free, Part II.
  • Don’t Let Profits Replace Purpose. Companies need to make profits, but here’s the dilemma: if they just focus on making profits, then they lose sight of what makes them special. Firms that lack a strong raison d’être have a hard time aligning the efforts of their employees. In a related post, I discussed how Firms Need Some Soul Searching.
  • The Holy Grail: A Link Between Customer Experience And Loyalty. I’ve been hoping to do this for a while: use data to provide the connection between customer experience and loyalty. And I finally did it. My analysis shows a high degree of correlation across the 9 industries that I examined, with the the strongest linkage for banks. That finding fits nicely with an earlier post which said that banks need to prepare for customer experience wars.
  • Trend Watch 2008 Wrap-Up. I really enjoyed writing a series of posts over the New Years break that examined trends published in The Economist, The McKinsey Quarterly, Advertising Age, Business Week, and Trendswatch.com. While I discussed 52 trends across all of the posts, this wrap-up looked at 14 that covered 4 areas: Consumer needs, online opportunities, required skills, and strategy & culture. 
  • Learning From The Good Fortune Advice Of Others. Fortune Magazine published advice from 25 famous people, and I commented on 8 of them that I really liked. There was great advice from big names like HP’s CEO Mark Hurd, Disney’s CEO Bob Iger, and Ford’s CEO Alan Mulally. But my favorite person on the list is Indra Nooyi, Chairman and CEO of Pepsico (who I found out about in a Time Magazine article). Her advice: “Whatever anybody says or does, assume positive intent.”  
  • Discussing Zappos’ Culture With Tony Hsieh. As a researcher, I get to interview a lot of people. But my discussion with Tony Hsieh, the CEO of Zappos was really memorable. It started a few minutes before our call when Tony twittered that he was waking up early (7:00 AM on Memorial Day) and needed a Red Bull before he spoke with me. Tony was great and I’ve become an even bigger fan of Zappos after the call. I also wrotr about another CEO that really understands customer experience, Wachovia’s Ken Thompson.
  • JetBlue’s “Happy Jetting” Is More Than Empty Promises. After a series of posts that looked at companies trying to change their customer experience through advertising efforts (JP Morgan Chase, Circuit City, and John Hancock) it was great to see that JetBlue was engaging its employees in its Happy Jetting efforts. I also wrote about how Ford is starting to view employees as potential brand ambassadors
  • Forrester’s 2007 Customer Experience Rankings. We used responses from nearly 5,000 consumers to rate the customer experience of 112 US firms. Our customer experience index (CxPi) examined three areas:meeting customer needs, being easy to work with, and being enjoyable. The three organizations with the highest CxPi were Costco, Borders, and Barnes & Nobles. The bottom three: Charter Communications, Medicaid, and Cablevision.  
  • Amex CEO Gains Insights From Napoleon. Kenneth Chenault, Amex CEO, used a quote from Napoleon that I really liked: “The role of the leader is to define reality and give hope.” This gave me an opportunity to discuss key leadership attributes: Deal with the reality of the world, engage your employees, provide a clear vision, and maintain a sense of purpose. While I’m discussing quotes, I really liked this one from Mackey McDonald, Chairman of VF Corp: “We realized we didn’t have to come up with brilliant ideas – we needed brilliant ways of executing good ideas.” 
  • Mashup: Halloween + Red Sox + CxP. This was a unique opportunity for me to combine three of my favorite things: my family, Red Sox, and customer experience. We had a great interaction with Jason Varitek on Halloween that ended up with my kids getting his autograph. You can see where he signed my son’s World Series ticket in this post. In another mashup of my interests, I my posted about how The Colorado Rockies Embraces Its Guests.
  • The Best Of CxP Matters: Volume #1Volume #2, and Volume #3. It’s amazing how quickly time (and many blog posts) just flies by. That’s why I’ve been writing “The Best Of Customer Experience Matters” to summarize every 50 posts; they also give me a reason to reflect on what I’ve written. So I decided to bundle all three of these as one of my favorites. 

In case you’re interested, here are the 10 posts that have been read the most:

  1. Experience-Based Differentiation
  2. My Manifesto: Great Customer Experience is free
  3. Forrester’s 2007 Customer Experience Rankings
  4. USAA: A Positive Example Of Customer Experience
  5. Trend Watch #5: Trendwatch.com “8 Important consumer trends for 2008”
  6. Webkinz: An example of a disruptive customer experience strategy
  7. Five Disruptive Customer Experience Strategies
  8. Are you listening to the voice of the customer?
  9. Apple’s Truly Genius Service
  10. Trend Watch #4: Business Week “Innovation Predictions 2008″

The bottom line: If you’d like to celebrate this anniversary, send a link to this blog to five of your friends.

Will Thompson’s Departure Hurt Wachovia’s Customer Experience?

Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:

To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:

  • 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
  • 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
  • 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
  • 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
  • 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
  • 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
  • 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”

Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:

Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.

The bottom lineGreat customer experience takes Thompson-like leadership.

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