How to introduce customer experience management into your firm

By Carol-Ann Morgan | April 1, 2013

Reading time: 10 minutes

Abstract

For B2B firms seeking to differentiate themselves, embracing customer experience management, as outlined here, offers a difficult but potentially rewarding strategy.

Research Topics:: Bus.-To-Bus. Research | Customer Loyalty | Customer Satisfaction Studies | The Business of Research
Industry/Market Focus:: Business-To-Business | Research Industry
Content Type: Research Methodology

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Are you experienced?

Editor's note: Carol-Ann Morgan is director of B2B International, a London research firm.

Putting the customer at the heart of the business is the central tenet of marketing. Marketing is about generating products and services that are rooted in the needs of the customer rather than the need of the company to sell its products. To be in tune with the needs of customers, rather than second-guessing, a company must move toward customer-centricity and ensure that the voice of the customer is integral to its strategy and that the customer is considered and discussed at the boardroom level and not just by the customer-facing staff and departments.

The evidence for making this cultural shift is strong:

Two-thirds of customers say a positive customer experience caused them to spend more.
Eight out of 10 customers would pay up to 25 percent more for superior customer service.
Three-quarters of those who switch suppliers/brands relate this to a poor customer experience and service.
More than half of those who recommend a company do so based on the customer experience rather than other factors such as price or product.
Almost all of those who have had a bad customer experience tell others about it, mainly to warn them off or stop them buying from the supplier.

While more and more companies recognize the importance of managing the customer experience, only 12 percent of companies surveyed in 2009 had a disciplined approach to the customer experience. Although listening to customers is a step in the right direction, it is the first step on a long journey which cannot be achieved overnight and which, most importantly, requires a change in culture and attitude rather than purely in process. Savvy companies are delving further into the customer experience, placing it at the heart of all they do. With this there has been a flourish of tools, techniques, processes and people who are there to offer their services.

Point of difference

Differentiation has long been felt to be the key to growth, though it more commonly refers to differentiation of products and services, the brand values and position and the channel. As products and positions have become more commoditized, companies have struggled to find their point of difference. However, more recently, the term “experience-based differentiation” has emerged. Forrester describes this as “a systematic approach to interacting with customers that consistently builds loyalty.”

Essentially, it is being seen as significantly different in the marketplace through the way in which the customer and the customer’s experience are managed, and the representation and demonstration of the brand values at every point of association between customer and the brand/company.

Forrester’s 2012 Customer Experience Index Report, which surveyed more than 7,600 consumers about their customer experiences, highlights three observations:

customers’ expectations are getting higher and higher;
companies wishing to differentiate on the customer experience will have to work harder as the gap between the best and the worst widens;
suppliers can no longer afford to be complacent about the customer experience.

The Forrester Index relates to B2C markets and customers but the practice extends to B2B customers too, as B2B suppliers recognize the value-creating capacity that can be demonstrated in the ROI. There are key differences between B2B and B2C customers: decision-making units are larger and more complex in B2B markets; there are often fewer suppliers available; and products often have some technical requirement. However, the assumption that B2B business decisions are made in a cold, logical manner in the absence of all emotions has been challenged.

Most companies would feel that their customers are considered in the companies’ activities. However, the degree to which the customer is considered can vary dramatically. The starting point is an honest evaluation of where on the spectrum of customer centricity the company lies (Figure 1).

Managing the customer experience is easier said than done. It has been found that while most companies want to engage in this approach, many have little idea of how to go about coordinating all elements of the customer’s experience across the company. It is noticeable that the number of dedicated senior executive positions directly responsible for the customer experience has grown significantly in the past few years. Indeed, the position of customer experience director or chief customer officer is no longer unusual on the board.

Engaged or simply served?

This brings us to consider what we mean by customer-centricity. Consider your own experiences when choosing a broadband supplier. How far do you feel your broadband supplier has gone towards making you feel engaged with it rather than simply served by it? What impact does that have on how you feel about that supplier, your likelihood to recommend your supplier, your likelihood to switch to another supplier when faced with a better deal or your willingness to buy any additional services, such as hardware, cable TV, etc., from that supplier if they were offered? The same applies to the business buyer, for example, the buyer of bulk chemicals, stationery or food products, where the strategic importance of the account can be very high indeed to the supplier.

The company that seeks to differentiate on its customer strategy needs to engage its customers. This involves far more than serving them efficiently and effectively. It involves tapping into the emotions of the customer, making them feel connected to the supplier and the brand at every interaction with the company, wherever this takes place, with each and every company representative and on whatever subject/issue. The company knows the DNA of the customer and the customer experiences the DNA of the company.

In his book The DNA of Customer Experience: How Emotions Drive Value, Colin Shaw, following years of research looking at emotions elicited from customers, found there are four clusters of emotions that drive or destroy value: advocacy, recommendation, attention and destroying.

The top cluster, advocacy, is rooted in the feeling of happiness. As humans, we seek out experiences which make us feel happy and happy customers become advocates. The recommendation cluster includes basic emotions like trust, being cared for, feeling valued. The personalization element of these emotions is very powerful as a desire to recommend.

The lower two tiers hold some danger signs. The attention cluster contains emotions organizations use to attract attention, i.e., interested, indulged, stimulated, energetic. However, companies need to ensure they have something to follow this. Attraction alone soon fades.

Finally, the destroying cluster is the most dangerous of all. These emotions are negative and tend to come from organizations that are focused on the inside rather than the outside view. Customers feel frustrated, angered, irritated, neglected and dissatisfied in their interactions with this type of company.

This model illustrates that a core element of the customer experience strategy needs to incorporate the emotional side of the customer experience as well as the processes. The power of the people delivering the product/service to elicit these emotions is critical in making the difference between serving and engaging customers.

Raises important questions

Accepting that the experience of the customer with the organization affords greater opportunity to elicit emotional bonding with customers raises some important questions for the organization in managing the customer experience:

How do we build organizational commitment to our customers?
How do we deliver great customer experiences?
How do we inspire staff to want to deliver great experiences?
How do we support our customers’ needs and goals?
How do we join up the customer experience across touchpoints?
How do we measure the impact of loyalty?

Customer experience management (CEM) starts at the top. It requires commitment from the senior leadership to listening to the customer and embedding their needs and experiences into strategy. It is common in large organizations for the various departments and functions that touch the customer to operate in a silo fashion. CEM requires cross-functional involvement and brand alignment, which cannot be achieved without senior leadership buy-in (and resources).

CEM also requires a particular skill set from the staff; people who have a commitment to delivering great experiences for their customers, to going the extra mile to ensure the customer feels happy and to do this every day. Therefore, leadership, brand clarity, people and cross-functional involvement are core requirements.

Bernd Schmitt, renowned consultant and marketing thinker, defined customer experience management in 2003 as “the process of strategically managing a customer’s entire experience with a product or company.”

He built on this further to say that, “The term ‘customer experience management’ represents the discipline, methodology and/or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.”

Schmitt essentially advocates a paradigmal shift from the traditional marketing concept, customer satisfaction measurement and CRM approach towards an approach that takes account of the experience of being a customer, from end to end, cradle to grave (however long that might be). Schmitt proposes a model of customer experience management that involves identifying the touchpoints with which the customer comes into contact across the organization, brand, service or product, followed by the development and implementation of the desired journey the customer makes through the organization.

His model has been criticized as being very linear and appropriate only for one-off transactions and thus may be more suited to B2C customers. With B2B customers, the journey is less straightforward, with repeat scheduled purchases, contracts, mutual dependence and complex relationships. An approach that maps the journey and punctuates it with “moments of truth,” “key points of influence” and “pain points” is felt to be more realistic and offer more opportunities to manage the customer experience along a convoluted path.

A typical approach for a customer experience strategy involves the following stages (see Figure 2), starting with the assessment and segmentation of customer needs.

Stage 1: Needs assessment and segmentation

The starting point is to understand what customer needs are, what drives them, what challenges them and what they need from suppliers’ products and services. Coupled with this is the segmentation of customers into groupings which enable us to see and serve the customer more specifically. This can be based on firmographics (known facts about the customer such as geography, company size or sector), behaviors (what they buy, when they buy, where they trade, etc.) or on needs (what they want, where they are going, what are their drivers). The latter is the most discriminating and requires a deeper understanding of customers to achieve.

Stage 2: Customer journey-mapping

This involves the construction of a detailed map of the customer journey for each of the customer segments. It is important to look at individual segments in this exercise as their journeys may differ. The journey details the customer touchpoints with the supplier from the first awareness through to usage and, if appropriate, termination of usage.

Stage 3: Identify the desired experience

The journey map is then used to design the ideal customer experience. This stage is about reflecting on the journey map and comparing the actual experience with the internally-perceived experience. It enables the organization to review its processes and streamline these to make the experience more effective, efficient and enjoyable for customers; one which they will want to repeat and to tell others about.

Stage 4: Design the brand experience

This stage is about emotion; it addresses the feelings that we want to evoke in customers in their experiences with the brand. To design the brand experience, it is important to have a clear vision of the brand identity and values. These are often translated into “promises” which will underpin the customer experience in terms of what they can expect from the relationship with the brand. They are usually generated around positive emotions that draw the customer into a closer relationship with the brand. This stage also involves looking at the people who deliver the experience, their attitudes and how much they reflect what the brand represents when working with customers.

Stage 5: Structure the touchpoints

Here the various touchpoints for the customer are structured to ensure the processes are in place to deliver the experience for the customer – one that generates the desired emotions associated with the brand to deliver longer-term loyalty. This stage is often quite process-driven, looking at ownership across the business for the various touchpoints and ensuring that the experience is seamless and the brand value delivered across and between all the touchpoints.

Stage 6: Measure and develop

This is the closing of the loop; measuring performance. There are several approaches to measuring the customer experience, not least the measurement of the return on the investment in financial terms. Common customer survey measures utilized are:

The periodic customer satisfaction survey – the “deep-dive,” fully-considered overview of the customer experience.
The event-based satisfaction survey – centered around a specific interaction, delivered very shortly after the interaction.
The tracking survey – a regular, random survey of customers, tracking perceptions and performance on key measures.

This data is used both strategically and operationally to make improvements for individual customers (usually key B2B accounts), groups of customers (segments which have particular needs) or all customers (general themes which would improve the experience across the business).

Requires an investment

Developing a comprehensive program requires investment in both time and resources to implement across the business and it needs to have senior management buy-in but operate company wide. It is like a religion with some core values, expressed in the acronym PACE:

Processes – are these in place to ensure a smooth journey?
Attitudes – are the people across the whole organization delivering the experience aligned and representative of the brand and its values?
Communication – do we communicate the importance of the customer at all times?
Evaluation – do we have anything in place to ensure we are delivering it?

Customer experience management and voice-of-the-customer are both programs that raise the profile of the customer in the long-term security of the business, recognizing customers as an asset for the business and thus worthy of boardroom consideration. The approach incorporates and brings together customer research in the form of needs assessment, customer segmentation, customer journey mapping, brand identity and perceptions and satisfaction and loyalty measurements.