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How Elite Companies Are Beating Your Customer Experience (And Why it Matters)

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Brian Cantor
Brian Cantor
02/06/2012

Even in an age of significant customer management focus, many of those facing pressure to expand their customer experience management initiatives still find themselves dwelling on two key concerns:

  • It’s one thing to talk about being "customer-centric" and driving the customer experience, but how do I actually operationalize the rhetoric—what actual actions and investments are required?
  • And why should I bother implementing those actions and making those investments? Of course I want my customers to "like me better"—who doesn’t—but what tangible ROI and competitive advantages can I realistically expect from transforming my processes, systems, organization and culture?

Both concerns have merit. After all, in this world of business minimalism and budgetary tightness, it is fair to question the seriousness of the so-called customer experience movement. Customer management thinkers talk a big game when it comes to dramatically overhauling how they operate in adherence to the voice of the customer, but if a few niceties like slightly lowering average handle time, posting free coupons on Facebook and more-liberally accepting merchandise returns are all it takes, why bother trying to push through sweeping, intimidating, time-consuming organizational change?

But if customers are going to see through minor efforts and demand that substantial change, what exactly is the reward. If given the choice, few would oppose having happy customers, but if the benefit of customer experience management does not go much farther than success on an arbitrary happiness rubric, why bother trying to push through sweeping, intimidating, time-consuming organizational change?

In its January 2012 "Customer Experience Management" report, Aberdeen Research reveals why organizations should bother. Those executing "best-in-class" customer experience management initiatives are operating significantly differently than laggards, and the impact of those differences can be seen on a number of key business and customer experience metrics.

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Defining the best in class

Though Aberdeen’s classification of companies as either best-in-class, average or laggard was driven by "results" (change in KPIs), the labels could have also been distributed by action. Clear variation exists between how deeply companies in the three groups have gotten behind their CEM initiatives, and from the disparity comes guidelines for the elements that, as a bare minimum, should truly exist in all customer management functions.

Process: 91% of best-in-class companies collect customer feedback across channels, compared with 75% for average companies and 61% for laggards. For synchronizing cross-channel engagement and identifying influencers on social media, the breakdowns are 55-38-24 and 48-28-17, respectively.

The lesson: The best companies view feedback as a cornerstone of a successful customer experience rather than a tiresome obligation. More importantly, they recognize the importance of delivering quality, consistent engagement across channels, treating every customer touch point as an opportunity to explore the voice of the customer in the customer’s preferred, natural habitat. Rather than making the internal decision to "phone in" support on certain channels and focus strongly on others, these organizations view their experience as a unified interaction hub and let the customer choose how to access it.

Organization: Organizational culture is a key priority for the best-in-class; 86% have a strategy to make the corporate culture more customer-centric, compared with 51% for average and 39% for laggards. Best-in-class organizations have also beaten the others when it comes to developing client retention programs; 67% have one, compared to 44% and 19% for the other groups.

The lesson: "Happy customers start with happy agents," "It comes from within"—pick whichever employee empowerment clichê you want, the lesson here is that successful organizations are re-building themselves to support customer centricity and realize that slapping a CRM system or Twitter strategy onto an existing, dysfunctional organization is not the answer. The specific emphasis on client retention reveals the importance of keeping the existing accounts satisfied, and it usually takes more than tacking on a half-hearted "upsell" attempt to the end of calls.

Knowledge: When it comes to standardizing data across the organization, the best-in-class companies lead (73% vs. 44% vs. 32). The same is true for segmenting customers by relevant criteria (64% vs. 54% vs. 45%).

The lesson: You’re not suddenly hearing and reading all the renewed hype about big data for nothing—the leading organizations are figuring out how to properly develop models and collect the necessary data from customers from all touch points, assuring pointed, relevant, valuable databases. They are also assuring that information is crunched in terms usable throughout the business, which allows the voice of the customer to have the business-defining impact it is supposed to have.

Performance: Best-in-class organizations provide color to their customer interactions; 62% analyze the influence of all such interactions on customer behavior, compared with 29% and 24% for the other respective groups.

The lesson: The best-in-class realize that customer experience management does not exist for its own sake—it is supposed to drive meaningful results across the business. Proper analysis of these results provides a valuable portrait of existing efforts, assuring the company can properly develop, modify and expand its existing approach. Sharing this impact with the relevant actors helps achieve further "buy-in" to customer experience endeavors while also assuring they have the information needed to compellingly improve their service level.

Other example differences include C-level buy-in (100% for best-in-class, 17% for laggards) and the level of struggle over CEM metrics (26% of best-in-class struggle, compared with 38% of the rest).

And why you should want to join the best-in-class

We know that these best-in-class organizations are far deeper into their customer experience management life cycles, but what benefit does that reality bring to their overall businesses?

Significant benefit, it turns out.

Take the employee buy-in component of customer experience management. For organizations that align compensation with employee achievement of CEM objectives, performance against key metrics was significantly greater. Annual revenue grew by 15.5%, besting the 9.8% growth for those lacking this element. Positive social mentions were up by 15.0% annually for those with employee buy-in, compared with 5.7% for those without it. Even stronger ratios exist for customer satisfaction (9.2%-1.5% growth) and customer retention (5.1%-0.9% growth).

Whether one is solely focused on the bottom line, solely focused on customer satisfaction metrics or, ideally, focused on the synthesis of both, there is reason to celebrate the impact of just one key customer experience management component.

On a broader basis, best-in-class organizations had a stronger retention rate (82%, compared to 77% for average firms and 24% for laggards), a significantly lower response time (34.7% decrease, compared to 6.6% and -2.8%), a higher customer lifetime value (21.4% increase, compared to 2.7% and -2.6%) and greater customer satisfaction (19.8% increase, compared to 1.8% and -5.5%).

Those with customer experience management programs, quite simply, are doing their bottom line a significant favor. Annual revenue grew by 14.1%, compared with 7.2% for those who did not have such a program. The increase in sales team attainment of quota was three times greater for companies with a CEM strategy, while the increase in cross- and up-selling was twice as nice.

Even the best can’t stop yet

Collectively, the data paints a crystal clear picture: those who take meaningful steps to develop a transformative customer experience management strategy achieve better customer satisfaction, better customer retention and, ultimately, better financial results. Through the use of better benchmarking, better employee engagement and culture creation, better C-level involvement and better technology, the best-in-class organizations are showing that customer experience management requires more than a declaration of intent. Luckily, the payoff is real.

Still, little suggests that any organization is in the clear just yet. While those who do not have significant C-level support, those who have not developed a consistent multi-channel experience and those who have not aligned employee training and compensation with customer experience goals need to get with the program urgently, even those who "get it" are still far behind on some key goals.

When it comes to working off customer data, the best-in-class might be more adept at doing so, but many still view the challenge of dealing with disparate customer data as a significant hurdle; in fact, the level of best-in-class companies and "all other" companies who identified it as a challenge is the same 48%.

And what about actually turning customer insights into progress for the business? Sure, the best-in-class are better at operationalizing their intelligence, but a whopping 26% cannot identify the impact of customer satisfaction on products and services. That is barely better than the 31% for "all others."

Starting and continuously evolving a relevant customer experience management program is a tall order and one that requires sweeping support—and change—from the organization. But for those fighting to continually improve the organization’s ability to deliver an elite customer experience, the data promisingly shows the effort is not in vain.


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