Beyond mere measurement

Editor’s note: David Rich is president of the Mystery Shopping Providers Association and founder and president of ICC/Decision Services, a Wayne, N.J, mystery shopping firm.

At most firms, customer service departments have become complaint departments, or worse, a place to return purchases. The companies themselves seem acutely aware of this problem, as evidenced by the anecdotes I’ve gathered from visiting and talking with service organizations over the past decade. They tell me that they spent years carefully measuring customer satisfaction and managing individual customer experiences. They then invested in sophisticated IT infrastructures and added new (primarily online) channels to reach their customers better. They achieved their profitability gains from these innovations. A small but growing percentage - the more progressive among them - now recognize that in order to generate increased profits and share prices, they need to integrate these developments into a more comprehensive concept.

Customer experience management, they say, is that concept, because it takes the silo approach (marketing research, operations, channel management) and transforms it into an approach that focuses on the customer in his or her entirety. What’s new about customer experience management is partially that it views the customer as a whole series of interactions across a variety of channels. But more than that, what is new is the idea of specifically changing service firms’ organizational structures to make the idea of customer experience management a reality.

Customer satisfaction

From a global perspective, customer satisfaction measurement is considered to be progressive. Anyone who doubts this should spend time doing consumer research in Russia  or China. In the 1960s, as the service sector began to rise rapidly in the U.S. economy, the concept of satisfying customers and measuring their satisfaction arose. Service companies began appointing customer satisfaction managers and making them responsible for all measurements relating to the consumer. Telephone and paper surveys, as well as, later, comment cards, served as the primary data collection devices available to customer satisfaction managers. In the late 1980s, emerging interactive voice response (IVR) and Web-based technologies began to replace the traditional comment card. Regardless of whether a company measured customer satisfaction through telephone interviews, intercept surveys, online surveys, IVR systems, focus groups, or, ideally, a combination of all these media, the most important thing a service company could do was to continually get feedback from customers and make it easy for customers to provide this feedback.

However, it became clear that measuring customer satisfaction or reviewing IVR/comment card data alone was not enough for service managers trying to retain and grow their customer base - it was like using a hammer alone to build your house. First, customer satisfaction measurement relied solely on customer feedback. This provided only one view of a larger picture. Managers also found that with IVR, like the comment card, it was difficult to determine whether the customers whose satisfaction they were measuring were high-value, profitable lifetime customers or one-off customers. This segmentation doesn’t matter to the customer of course, but it certainly matters to the company. What’s more, IVR was predominantly used to draw the complaints of dissatisfied customers. The resulting data were often skewed towards negative information. Sharing results of negative survey data is not a great way to motivate ever-important employees! In short, customer satisfaction measurements, whether telephone surveys, comment cards or IVR, weren’t helping companies avoid customer dissatisfaction, and they weren’t identifying opportunities for top-line growth well enough.

Service managers recognized that in order to construct their house of happy customers, they needed complementary tools.

Customer experience measurement

In order to get a better, more immediate handle on opportunities and issues at various points of service, service managers needed the saw that could work alongside IVR’s hammer. They turned in large numbers to mystery shopping, which measured the exact degree to which standards of service and operations were being met. Mystery shoppers provided objective insight into a detailed set of actionable metrics - price and promotions auditing, customer service, merchandising, facility operations, human resources and management standards. Because of the robustness and precision of mystery shopping data, mystery shopping became a de facto standard for the vast majority of service companies around the world. It provided companies real-time data and tactical control; at a very granular level, they had specific information for improving their business.

For example, by sending mystery shoppers to numerous locations simultaneously, corporate marketing could determine which establishments were adhering to important standards. By sending mystery shoppers out over time to the same locations, companies could determine whether certain operations were declining or improving. And managers could determine whether their new concept of asking the customer whether they wanted a store credit card was being followed through on and by whom. Interestingly, it was not only marketing departments that used mystery shopping. In equal numbers, human resource and operations managers found mystery shopping to be an essential part of their constant need to train the service company workforce and monitor facility conditions.

Of course, it was not perfect! What it lacked - direct customer feedback - customer satisfaction measurement had. Managers did not choose one tool over the other. Instead, they measured customer satisfaction using primarily phone surveys and their IVR tool; and they measured customer experiences and employee adoption of new techniques using, typically, their mystery shopping tool. By the 1990s, IVR and mystery shopping were among the most trusted tools in customer service kits around the country.

Customer relationship management

Enter the software and Internet boom of the mid- and late 1990s. Enabled by the emergence of user-friendly databases and interfaces, service managers could review real-time, point-of-service information on customers. The software applications, grouped under the rubric of customer relationship management (CRM) applications, enabled service organizations to catalog the many interactions they had with customers. CRM applications reported activity, stage and type of customer, and provided tools for maintaining and enhancing a company’s relationship with its customers. Anyone who has gone to a new hotel within a chain they regularly patronize and experienced the receptionist asking, “Ms. Jones, would you like your bed turned down as usual this evening?” has experienced the power of CRM. Within corporations today, CRM often works alongside customer satisfaction and customer experience measurements, but unfortunately it rarely works cohesively with them.

The Internet

While they were gaining this CRM tool, service organizations also became empowered to reach customers through the new channel of the Internet. Web sites popped up like dandelions, with customers’ experiences reaching new lows: they couldn’t get onto sites, they got kicked off of sites, the connections were too slow, they couldn’t find their shopping carts, they were falsely charged through fraud, etc. Customers were unhappy, and something needed to be done.

Service firms’ e-commerce departments began to talk about the customer experience, at first internally, and then externally. Tracking software arose to track the customer’s experience on a Web site, as well as to follow up on that experience. But could this new way of thinking about the customer as not a satisfaction score or a point of service but as a continuum of interactions and impressions be applied not just to Web sites but across channels and across the organization as a whole?

Customer experience management

It could, and this continuum of interactions is known today as customer experience management, or CEM. If IVR is the hammer, and mystery shopping the saw, then CEM is the service company’s blueprint: It incorporates customer satisfaction and customer experience measurements, as well as CRM, into one complete view of the customer across channels, including the Internet. Many service organizations are talking about CEM as among their most important priorities, yet I have found that most companies’ organizational structures have not caught up to this reality. Almost all major companies have departments that individually measure and manage each of the three components of CEM. For instance, marketing research measures satisfaction and determines customer needs, marketing manages channels and measures customer experiences, operations manages store/associate performance through mystery shopping, and sales or IT manages CRM. But few companies have one department or manager that integrates all of these into one holistic view of the customer experience.

I believe that these slow-to-adopt service firms will begin to suffer for this mistake and that those companies that not only talk about CEM but also explicitly organize around CEM will surpass their peers in delighting their customers and growing their business. It’s highly likely that they’ll also delight their shareholders.

The recognition that the customer experience drives the top line, the bottom line, and shareholder value has not been missed by most organizations. It is the development of the new organizational structure to support the customer experience management concept that now requires executive leadership and a long-term budget. The tools for measuring, managing and monitoring customer satisfaction and store performance will always be needed. Decisions on when and how to use them should now be made by someone whose responsibility is more than handling complaints or improving store operations but rather ensuring customer delight.