Written by Vivek Jaiswal | Co-founder, Customer Guru
What is Customer Experience Management?
Customer experience (CX) is the product of an interaction between an organisation and a customer over the duration of their relationship. This interaction includes a customer’s attraction, awareness, discovery, cultivation, advocacy and purchase and use of a service. It is measured by the individual’s experience during all points of contact against the individual’s expectations.
Gartner defines Customer Experience Management (CEM) as “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.”
In total, CEM is all about assessing and improving the interactions between your customers and your brand; right from the point when a prospective customer comes across your advertisement, searches for you on the web, communicates with your retail store, checks with friends for their opinion about your products, and finally purchases and uses the product. CEM therefore is the overarching principle behind customer relationship management, customer support, customer engagement, and customer service. It is without a doubt that expectation plays a big role in managing the customer’s experience. Only by gauging and understanding the customer’s expectation can a company deliver an experience that meets or exceeds that expectation. A lot of the times it is also about setting the right expectation; and this does not have to mean that the customer expectation should be tuned down. Case in point: through iPhone, Apple set the expectation that a smartphone doesn’t have to be just a phone, it can be much more than that. Steve Jobs introduced iPhone as iPod, Phone, and Internet packed into one device. Since then, the iPhone has set the benchmark of what customers expected out of a new-age smartphone!
The aim of CEM is also to optimise the customer interactions so that it positively impacts the experience. On the other hand, using CEM, companies can minimise detractors – or unhappy customers, who could potentially destroy a brand. Today, one fundamental goal that a company must establish is a strategy to manage customer experience effectively. This strategy must incorporate all customer touch points throughout the organisation. Most importantly, this strategy should not forget to treat customers as people. I believe, Bruce Temkin, Founder of Temkin Group, puts it best when he says:
“Your customers don’t live in spreadsheets; you need to go out and talk to them to understand who they are as people. That is, of course, unless each of your customers is really a 55% female with 2.3 kids who is 48% from a suburb and is 11% Hispanic.”
Why Customer Experience Management is Important – and more so in today’s business world?
With the advent of the information age, the bargaining power has completely shifted towards customers. Potential customers can quickly research about the experience of your customers with your products/service and accordingly make their purchasing decision. Brands have commanded, and some still do, a huge power in luring consumers to buying from them. However, as highlighted in an article published on Harvard Business Review, the equity of brand value in a company’s fair market value is declining. The share of the value of customer relationship almost tripled between 2003 and 2013. It is clear that even strong brands face bigger competition from new comers who are focused on delivering exceptional customer experience. Indeed this also emphasises the importance of customer experience management. Not just this, here are a few more reasons why I believe customer experience management is really important today:
Word of Mouth
In today’s era a large proportion of customers rely on word of mouth to construct an image of a brand. After extensive research, Esteban Kolsky – a leading customer strategist – found that 13% of customers tell 15 or more people if they’re unhappy and conversely 72% of consumers will share a positive experience with 6 or more people. Furthermore, the same research showed that 55% of consumers are willing to pay more for a guaranteed good experience and 86% of consumers are willing to pay more for an upgraded experience. Not a bad gain for your company, is it?
However, the most frustrating experience for a customer is when they are not given a solution to an issue that they are facing with the company’s product or service. In fact 44% of customers confirm that they have received the wrong answer while seeking help from customer support. Some customer service representatives are so unhelpful, that customer’s turn into detractors and begin to bad mouth the brand. Something that not only can deteriorate a brand but also repel new customers from it. To reinforce this fact, Kolsky’s research proved that 84% of consumers are frustrated when the agent does not have the information they need.
With the ease of voicing their concern on social media or through their network of friends on Whatsapp or Snapchat, you can imagine extent to which a cusotmer who has had a bad experience could harm your brand. But with a set process to manage the customer experience and improve it with every passing day, you will only see customer experience working in your favour.
Lower costs by reducing customer churn
Customer churn is a term used by businesses to refer to customers who have terminated their affiliation with a company. For example, in online businesses a customer is considered to have churned after a certain amount of time has passed since the customer’s last visit to the site or use of the service. Is it really worth losing that many customers due to poor customer experience?
As per Kolsky’s research 67% of consumers point to bad experiences as the reason for churn, while in his research he also points out that only 1 out of 26 unhappy customers complain. The rest churn. The most important lesson to be learnt from this is that not hearing from a customer doesn’t mean that they are satisfied. The real foe is indifference. If in the first place companies can provide worthy service to customers, 85% of customer churn can be prevented. Companies should also aim to shorten response times as customers aren’t afraid to take their business elsewhere if they are not satisfied or given an outstanding experience.
This loss can be minimised through proper customer experience management.
Companies with better customer experience outperform others
Reputed research firms such as Forrester and Gartner have empirically derived that organisations that have better customer experience, outperform their competitors in every industry. As you impress your customers with better products, service and experience, they not only become contented, but also turn do repeat business with you. With increased customer loyalty, you are able to reduce customer acquisition costs, cost to services, and also acquire more customers through your existing customer base.
Moreover, the above chart from one of the Watermark consulting research papers shows that between the years 2007 to 2014, firms that pioneered in customer experience have encountered significantly higher rates of return relative to the S&P 500 Index. Such companies saw a 35 point lead over the stock market and organisations that didn’t bother to maintain their customer experience lagged behind by 45 points.
Customer experience management today acts as a competitive advantage to companies who can tactically tap into such a resource. Failing to realise that your customers come first will result in low growth of your firm.
How do you manage Customer Experience?
A simple framework that every company can follow to sustain successful customer experience management is using the 3 M’s, as below:
Every improvement starts with measurement first. One needs to assess where they are before they can start running towards their goal.
Similarly, any organisation that wishes to improve customer experience should start with measuring it first. Use a metric like Net Promoter® scale as a measure of customer experience because it is simple, standardised and actionable. Again, consistency is the key here. Don’t measure CEx just as a bench-marking exercise that yields a handful of action points to present in the board meeting. Commit to measuring customer experience regularly and share it with the organisation openly. Remember – What gets measured, gets improved.
Only when an organisation starts measuring customer experience regularly can it start observing the trends and drivers. That’s when magic happens!
If you are serious about consistently delivering an experience that earns you customer loyalty, you should monitor the fluctuations in customer experience score and identify the reasons behind those fluctuations. Get to the bottom of what caused a drop and start fixing problems upwards. When the score starts improving, identify the reason behind that too!
More often than not, you’d find people on both sides as the reason. Coach those who are unable to move the score up or, even worse, caused the score to dip. On the other hand, make sure you reward the ones who went out of their way to get you that positive delta in the score.
Having put the measurement and monitoring processes in place, thereon it’s critical to manage the customer experience; ensuring it’s always trending upwards.
This is perhaps the toughest part and probably the only part where most organisations stumble. Managing the customer experience is about engaging with customers, listening to their feedback, communicating what will be done about it, and taking action on those feedback. It also includes opening internal communication channels to spread the voice of customers across the length and breadth of the organisation. This ensures that everyone knows how their actions translate to customer experience. When everyone knows, everyone works together to improve it.
In conclusion, these 3 M’s might seem like an oversimplified version of everything that an organisation needs to do to improve customer experience. Perhaps that’s true. Nevertheless, it would undoubtedly help any organisation to start improving customer experience. All they need to do is: Measure, Monitor, and Manage.
Resources To Your Rescue
Want to learn more? Here are some resources that I would recommend:
Top 6 Books on Customer Experience Management
This New York Times and Wall Street Journal bestseller is written by customer service expert Shep Hyken. In this insightful book, Hyken delivers seven powerful strategies that any organisation can implement to create greater customer and employee loyalty: membership, serious FUN, partnership, hiring, the after-experience, community and walking the walk. Supporting the seven main strategies are 115 “Take-Away’s.” There is definitely something here for everyone: owner, executive and employee. A must read for people starting out in CEM.
Written by one of the leading experts in customer experience, ‘Chief Customer Officer’ gives you a proven 5-competency framework that has launched and advanced the customer experience transformation in business-to-consumer and business-to-business companies around the world. This book outlines in detail Jeanne Bliss’ Five-Competency Model, the same model she uses to coach the C-Suite, Chief Customer Officers and Vice Presidents of Customer Experience globally.
‘What’s the Secret?’ gives you an inside look at the world-class customer service strategies of some of today’s best companies. You’ll learn how companies like Disney, Nordstrom, and The Ritz-Carlton get 50,000 employees to deliver world-class customer service on a consistent basis- and how your company can too.
In the form of this book, marketing consultant Jill Griffin has written a practical guide for planning strategies to assure customer loyalty. She uses actual examples to describe whom a company should target, how to find qualified prospects, and how to turn customers into company advocates. Griffin also details how to win back inactive customers and how to develop a loyalty-driven corporate culture.
Drawing on over sixty years of experience in shaping customer centric strategies and technologies for leading companies, the authors bring practical and proven ways to create customer experience programs and overall business strategies. The key is to strike a balance between programs that are effective but prohibitively expensive and programs that fail to dedicate enough resources to be effective. In the middle ground lie the tools that everyone overlooks – foundational and disruptive technologies. This book explains how to combine strategy, leadership, organizational change, and technology to develop products and services that are highly valued by customers, form bonds that keep clients from turning to competitors and transform customers into your best advocates
This amazing book has been co-authored by Rob Markey along with the founder of Net Promoter Score, Fred Reichheld. This practical and insightful book defines the fundamental concept of Net Promoter Score, explaining how it can help a company grow and increase profits. It also shares inspiring stories of organisations that have transformed their performance and grown tremendously by using this metric.
Top 6 blogs to follow
Bill Quiseng’s Customer Service Blog – Bill Quiseng is a speaker, blogger and award-winning writer in the areas of customer service for front-line associates and customer service leadership for managers.
Net Promoter System – Loyalty Blog – This blog initiated by Bain & Company, frequently writes excellent articles focused around customers experience and the Net Promoter Score®
Customer Guru Blog– Customer Guru, a boutique B2B consulting firm that focuses on making its clients customer centric, writes weekly articles based on customer experience and the evolution of customer experience management
Customer Experience Matters– Customer Experience Matters is a blog that is run by the Temkin Group. Temkin Group are leaders in customer experience research and consulting. They mostly write about customer experience management backed by their research data.
Shep Hyken’s Customer Support Blog– Shep Hykenis a customer service expert, professional speaker and bestselling author who works with companies and organizations who want to build loyal relationships with their customers and employees.
People Metrics Blog– The People Metrics Blog is a customer experience management blog written by CEM software and service experts who live and breathe customer centricity every day.
In today’s day and age customer experience management should be considered a core operation of the company. Gone is the time when CRM gave a firm its competitive edge. Now, it is CEM that has to be embedded throughout the company. The customer should be placed the at the heart of the organisation and everything else should flow from there. After all as Sam Walton said
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”