Best practice organisational structure to deliver Customer Experience Management

March 27, 2011 By 3 Comments

Over the past week or so there’s been a really great debate on the organisational structure to most effectively deliver Customer Experience Management going on over at LinkedIn.   With more than 70 posts by wide range of experienced professionals in the field, it’s been one of the most interesting discussions I’ve seen on LinkedIn.

However, with 13 pages of content and so many comments it’s hard to get handle on what is being said.  So, I thought I’d summarise the post into a best practice organisational structure approach to delivering customer experience management.

There were some differing opinions, as you would expect but the key items of general agreement are:

  1. CEO/CxO Support – this is not negotiable.The senior leadership of the organisation must fully support the idea that a focus on customer experience management can driver higher share prices and profits.Further, they must walk the walk not just talk the talk.If that person does not believe that improved customer experience leads to greater profits the process is pretty much doomed to die a slow, unbudgeted, death.
  2. The organisation must have consistent, and simple to understand customer centric values that are genuinely held by staff and senior management.If you can ingrain this into the organisation then the rest of the process will be simpler. Think Disney or Apple.
  3. Operational Departments are responsible for implementing CEM.They have the critical departmental domain experience to understand their business better than anyone else.

    The CEM Department (see below) understand CEM and has the tools to support the Operational Departments in implementation but at the end of the day the buck stops with the people that know their part of the business the best.

  4. Operational Departments must have CEM KPIs.These are rolled down from the C suite and go hand in hand with the standard KPIs that they have.

    The key understanding here is that CEM KPIs are not just an interesting diversion they are  lead profit indicators.  That is the key importance of Net Promoter Score, for instance.  It’s not just interesting, it leads revenue growth.

    It goes without saying that the CEM KPIs should be connected to remuneration in the same way that the other KPIs are connected to remuneration.

  5. The CEM Department should be an enabler or centre of excellence for customer experience management skills and systems within the organisation.The simple analogy is with the IT or Accounting departments.Accounting is responsible for counting the money, making sure it’s reported accurately, counselling the rest of the organisation on how best to use the money BUT NOT making sales.  Nobody thinks this is strange.CEM is no different.  It is a set of skills and systems that are used by the rest of the organisation to improve their individual CEM performance.The CEM Department staff should be viewed as consultants to the rest of the organisation: people with desired skills and the ability to add real value to the whole process.
  6. The CEM department should have CEM KPIs.These should be the same CEM KPIs as the Operational Departments.

    The goal here it to make the CEM Department and the Operating departments co-dependant.  Operating departments should be seeking out assistance from CEM to help them improve.

In terms of process implementation there are some gems of insight in the comments.

  1. If the CEM Department is large enough, consider having them hot desk around the organisation to become ingrained in the business.
  2. Where does the CEM Department report?  This varies but is generally either directly to a “C” level executive, even the CEO, or into Marketing.  Personally I am less keen on having it roll into Marketing.
  3. As noted above with the sharing of KPIs, the CEM Department is not solely responsible for the customer experience as this will relieve responsibility from the Operational Departments.
  4. The size of the CEM Department: This group does not have to be large.  It can be as small as an outsourced consultant to the CEO and up to 20 people for the largest of organisations.
  5. Cross-customer product silos can be of particular issue.  Consider banks who have mortgage, transaction accounts, personal loans, etc. all interacting with the customer.  These organisations have a particular issue and often the silos will need to report to the same person to allow a customer focus to override the product silo focus.
  6. Steering Committee: If you add a CEM Steering committee comprised of senior executives through the organisation you will also add a high level coordination function to the overall CEM initiative.

More Information

If you’re looking to implement a customer experience management project why not start by downloading our free 4 Steps to Great Customer Experience Management report.

 

By Adam Ramshaw

Filed Under: Best Practices, Customer Experience Management Tagged With: ,

What is the role of Customer Feedback in the ITIL Framework?

March 16, 2011 By Leave a Comment

itil frameworkRecently a colleague of mine had an interesting conversation with the service delivery manager for a well known IT company. The discussion turned to customer experience management and the service deliver managers noted that his only “measurements” of the customer experience were, essentially, the ITIL service delivery process.

If you’ve never heard of ITIL you probably don’t need to worry about it. It is a framework of concepts and process for IT systems development and management. If you’re keen to know more have a look on Wikipedia ITIL.

On the other hand, if you use the ITIL Framework in your business the questions you should be asking yourself are;

  1. How do you measure the customer experience and effectiveness of your ITIL processes;
  2. How do you know that system driven call management metrics tell the whole story.
  3. Is the list comprehensive; and
  4. Are you tracking the experience elements that are important to customers or just the ones that are easy to measure?

I’ve talked before on this blog about the need to know not just how you perform in a range of customer experience attributes but also how important a service attribute is to the customer. So the question becomes; if you are using the ITIL Framework how do you determine the right customer experience measurements to use?

The answer to this question is difficult because there is no universal, independent set of customer experience metrics. Each company has a slightly different strategy and so a slightly different set of customer experience metrics come into play. Unfortunately that means you can’t rely on a standard set of metrics.

ITIL v3 is the most recent version of the framework.  It defines;

  1. Incident: the occurrence of a symptom, e.g. an application crash or a network communication link failure;
  2. Problem: the underlying root cause of the symptom. e.g. an application software bug or a product defect or hardware failure; and
  3. Service Request: used to request new or altered services and can included requests for information or change.

Common call management metrics include (by Severity Level):

  • Incident/Problem Response time
  • Incident/Problem Restoration/Resolution time
  • Service Request Resolution time
  • Number of Incidents raised and closed per period
  • Number of Problems raised and closed per period
  • Availability of Systems and/or components per period

While these are a good and interesting set of metrics they do not include some of key customer experience drivers of customer loyalty in the IT industry that we have uncovered over the years.

For instance, while Problem Resolution Time is important we have often identified that “closing the loop” with customers after problem resolution is at least as important and often more important for customers. While it may seem odd that solving the problem may actually be less important to customers than knowing what happened, it is true.

Also, delivering against customer needs, as scored by the customer, is also an important driver of customer loyalty. While incident response time and number of problems per period may be important, those values will be overshadowed if you are not delivering against customer needs.

So from a practical perspective how do you determine whether meeting the technical elements of your SLA equates to delivering a good customer experience? Well you have to ask your customers. No amount of internal review and bottom up analysis, regardless of how logical it is, can substitute for obtaining feedback directly from customers.

Determining what is important to customers is not straightforward but there are a few different techniques that you can use.

Once you have uncovered these key elements you need to embed them in your ITIL framework.  Including the key customer service drivers in Service Level Agreements is the simplest and most direct way to ensure that you are continually focusing on delivering the right customer experience to drive customer loyalty.

To see where you stand, start by reviewing your existing service level agreements to identify how each component explicitly links back to important customer experience elements. Then ask yourself how you know that element to be important to your customers.

If you can’t answer this second question then I suggest that you need to consider collecting information from your customers directly. Properly written and executed customer surveys are the most reliable way of collecting that data.

So in summary:

  • Just because you measure something doesn’t mean it’s important to your customers;
  • If you assume your perception of an issue is the same as your customers, you’re probably wrong; and
  • The best way to resolve the issue is to ask your customers.

Looking to develop your own customer feedback process. Download our free whitepaper; How to implement an effective customer feedback system. It provides a step by step process to guarantee success.

This post was co-written by John Greenwood and reviewed by Vincent Cleary. Thanks for your help John and Vincent.

By Adam Ramshaw

Filed Under: Customer Experience Management, Customer Feedback Surveys Tagged With: ,

How do you determine the value of Net Promoter Score?

December 5, 2010 By Leave a Comment

Recently, the CFO of one of my customer’s asked “How to we determine the value of Net Promoter Score?” and wanted a “two sentence response”. The question was asked in the context of investing in NPS data collection.

It is a very good question and one that took a while for me to answer succinctly.  Not because the value of NPS is low, it is high, but because there are a few links in the logic chain that need to be made explicit before you can provide that answer.

Link 1: Increasing customer loyalty increases business value.

Customer loyalty is the propensity for a customer to re-buy, buy more or buy different things from a company over an extended period.  It is generally acknowledged that it is cheaper and more efficient to sell again to an existing customer than find a new customer.

On this basis; higher levels of customer loyalty increase business value.  If you doubt this assertion you can try out a few scenarios on this customer lifetime value calculation tool.   You can change the different variables in the model to see how it affects customer and business value.

You will see that increasing the customer retention (or loyalty) statistic invariably leads to increased company value.

Link 2: Net Promoter Score processes tell you what influences customer loyalty

The next critical link is that the Net Promoter Score approach can help you to understand what service and product attributes influence customer loyalty.  Many organisations have tested the Net Promoter Score approach and, those that have implemented it correctly, have tapped into a very effective way to listen to and understand what customers want.

This is important because in order to lift customer loyalty you first need to understand what customers care about, what is important to them and how you are performing in their eyes.  Only with this understanding can you make the correct changes in the business.

Link 3: Make changes in your business to efficiently deliver what customers want.

The link to action is the last critical step.  Measuring and understanding are a waste of resources without making changes in the organisation to deliver what customers want.  You have to make changes in your business to deliver value from the NPS process.

The value of Net Promoter Score

So to come back to our first question: “How do you determine the value of Net Promoter Score?”

Think of it this way, the only reason that you have a speedometer in your car is so you know how fast you are going.  If you were to ignore this information it can come at a heavy penalty: death, injury or at the very least a speeding fine.  Instead you use the information it provides to constantly adjust your speed up and down to optimise your progress to your destination.  Fast enough to be efficient, legal, and not slow down those around you.  Slow enough to not be a danger to yourself or those around you.

Net Promoter Score feedback is no different.  It enables you to constantly adjust your business to meet what customers want without over-delivering in one area or under-delivering in another.  It helps you to be the most efficient and effective business possible.

So what was my two sentence response?

“The value of the Net Promoter Score process is the lift in business value derived from driving up customer loyalty and driving down organisational costs.  NPS enables the company to constantly adjust product and service attributes to meet customer needs in the most efficient and effective way; without over-delivering or under-delivering in any area.”

More Information

For more information on Net Promoter Score and how/why it works download our free Introduction to Net Promoter Score (NPS).

If you are thinking about implementing Net Promoter Score (NPS) in your organisation give us a call. We can help you to implement an effective Net Promoter Score customer needs survey program for your business.

Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

By Adam Ramshaw

Filed Under: Customer Experience Management, Customer Feedback Process, Net Promoter Score Tagged With: , , ,

The Secrets of Great Customer Experience Organizations are not so Secret

August 22, 2010 By 2 Comments

When a new business buzz makes headlines, a new buzz of how to’s follows.  Customer Experience Management (CEM) is no different.  But, to me, Customer Experience Management is mostly a new theatre for existing skills, not a new set of skills.

Forrester does good research but in this recent article: Three Secrets Of Success For Customer Experience Organizations, they may be looking for problems that do not exist and finding solutions that are generic.

The three Customer Experience Organisation secrets they uncover boil down to: good leadership, collaborative teams and enough resources to deliver.  These are not the special and unique secrets of success for Customer Experience Organisations.  They are the secrets to success for every non-line management support organisation.

That is not to say that there is no specialisation required to design and build great customer experiences.  There are indeed a range of domain specialist skills needed when running a customer experience management organisations.  These include a knowledge of the key customer focused tools/concepts such as Net Promoter Score and Moments of Truth. It is also important to understand and be able to apply techniques such as Touch Point Mapping.

Also, a working knowledge of how customers respond in different situations is important.  Understanding that customers don’t necessarily make rational (or even conscious) decisions about what is most important to them in a specific customer experience setting is an important, non-obvious, insight.

To be successful in CEM staff must care about making a difference in the customer experience.  They must also have an intuitive understanding that a great customer experience is not just great for the customer but also great for the bottom line of the company.  Designing an experience that customers will come back for is not as important designing one that customers like and meets the commercial goals of the company.

Beyond these domain specific skills, however, the skills required of the customer Experience Management team can be found in traditional quality management approaches and their later incarnations such as Six Sigma and Lean Six Sigma.

In fact many of the “lead from the middle” attributes of successful business improvement teams can, and should be, found in the Customer Experience organisation.  Rarely does the customer Experience management team have a line management role; it is more often deployed across business units as an enabler, inspirer and facilitator to the business.

In this deployment, the cross-functional coordination skills of the team members are important, as is clear CEM leadership from senior line management.  Again these are not special Customer Experience attributes– they are attributes required for any non-line management enabler team.

Before I close, there is one specific item that I will disagree with from this paper and it has to do with resources:

Their own budget. When customer experience projects must compete with projects from operations and product management, they often fall below the funding line because those groups’ goals — like revenue generation — carry more weight.

In the Customer Experience Management work that we do we ensure that business cases are created to support all changes.  To be successful long term, CEM must stand head to head with the other areas of the business  in generating shareholder returns.  If it is treated as a “special case” it will never get an equal seat at the table with sales, marketing, operations and the other areas of the business.  And, as we know, “special cases” only last as long as they are fashionable.

If you’d like to learn more about Customer Experience Management download our 4 Steps to Customer Experience Management whitepaper.  It examines the process of determining the value, designing and executing Customer Experience Management (CEM) programmes.

By Adam Ramshaw

Filed Under: Best Practices, Customer Experience Management Tagged With: , ,

Making Changes in your Customer Experience

August 1, 2010 By Leave a Comment

This article in the Australian Financial Review (Kmart reborn in program of change) was a timely follow up to my blog post of a few weeks ago when I looked at whether announcing changes in customer charters was good or bad for customer satisfaction.

In that article I argued that it was better to build the customer experience from inside the organization and let the customers gradually experience the difference.  The other approach: announce a major change in the customer experience to staff and customer, carries the risk of increasing customer expectation and lowering customer satisfaction.

Let’s look at the Kmart example as a case study for the “get it right then announce it” approach.

In this article Kmart announces that they have been quietly making and testing changes in their offering.  They have not however, been announcing those changes in their advertising to customers.  One example of the changes tested is running very special specials that they only advertise in store.  In one instance they dropped the price of jeans from $20 to $10 and sales grew 10 fold.

Now however, the game is changing.  Kmart is launching the new price strategy in a very visible advertising campaign.

Just by the way, skeptics would say that it’s easy to sell if you halve the price but it hurts overall profit levels.  In this case the reverse is true.  Net profit levels at the company almost doubled year on year based on the company’s ability to negotiate better deals for the higher volume from their suppliers.

My guess (I have no inside knowledge) is that there is much more to this story than meets the eyes.  In the past Kmart has pursued a “high-low” pricing strategy that has not caught the consumer’s attention.

In all likelihood Kmart have been testing a few different approaches to improve business.  Perhaps they tried a high price strategy as well as the low price strategy that is outlined in this article.

However, now the testing is over and they are ready to launch the successful strategy as their new approach.  But all that we as consumers see is the strategy that worked the best: the low price strategy.  We haven’t seen the ones that didn’t work so well.

Consider the other way that they could have approached the change management equation.  They could have decided on a new strategy, engaged an advertising agency, launched a big advertising campaign and raised (lowered actually) consumer prices expectations.

From that day forward customers walking into Kmart stores would have had new expectation levels and benchmarks for satisfaction.  Even if management selected the correct strategy (a smaller range of low-priced products) the inevitable teething issues faced in the transition would have led to many instances of less than happy customers.

Instead the organization ensured that the back-end systems, merchandise selection plans and logistics all supported the right strategy.  The result is that the organization is able to launch a successful new business strategy having already tested it and removed the kinks.

There is one last item that I think is interesting here and that is the role that word of mouth marketing had supporting the right strategy.  When there is no advertising campaign for a change in company positioning, the only way that customers can find out about the change is via their friends and family.

Selling 10 times the number of jeans does not happen because the person in store buys 10 pairs of jeans.  It happens because that person buys two or maybe three pairs and tells their friends.  That is how the soft launch and change in customer experience (low prices) permeates through the customer community.

At this pint prices are lower than people expect and so their satisfaction is higher.  Compare this to the alternative approach when expectations are inflated through the advertising and can only be confirmed, if prices really are lower, or defeated, if prices are not lower.

If you are considering embarking on a customer experience management project you might like to download our free Customer Experience Management White paper for practical tips and suggestions on how to approach the issue.

This article in the Australian Financial Review (Kmart reborn in program of change) was a timely follow up to my blog post of a few weeks ago when I looked at customer charters.

In that article I argued that it was better to build the customer experience from inside the organization and let the customers gradually experience the difference.  The other approach: announce a major change in the customer experience to staff and customer carries the risk of increasing customer expectation and lowering customer satisfaction.

Let’s look at a case study for the get it right then announce it approach.

In this article Kmart announces that they have been quietly making and testing changes in their offering.  They have not however been announcing the changes in their advertising to customers.  One example is that they have been running very special specials that they only advertise in store.  In one instance they dropped the price of jeans from $20 to $10 and sales grew 10 fold.

Skeptics would say that it’s easy to sell if you halve the price but it hurts overall profit levels.  In this case exactly the reverse is true.  Net profit levels at the company almost doubled year on year based on the company’s ability to negotiate better deals for the higher volume from their suppliers.

Now however, the game is changing.  Kmart is now launching the new price strategy in a very visible advertising campaign.

My guess (I have no inside knowledge) is that there is much more to this story than meets the eyes.  In the past Kmart has pursued a “high-low” pricing strategy.  In all likelihood Kmart have been testing a few different approaches to improve business.  Perhaps they tried a high price strategy as well as the low price strategy that is published in this article.

Now the testing is over and they are ready to launch their new approach.  But all that we as consumers see however is the strategy that worked the best: the low price strategy.  We haven’t seen the ones that didn’t work so well.

Consider the other way that they could have approached this change management equation.  They could have decided on a new strategy, engaged an advertising agency, launched a big advertising campaign and raised (lowered actually) consumer prices expectations.

From that day forward customers walking into Kmart stores would have had a new expectation levels and benchmarks for satisfaction.  Even if management selected the correct strategy (a smaller range of low priced products) the inevitable teething issues faced in the transition would have lead to many instances of less than happy customers.

Instead the organization soft tested a few different business strategies and ensured that the back end systems, merchandise selection plans and logistics all supported those strategies.  The result is that that the organization is able to launch a successful new business strategy having already tested it and removed the kinks.

There is one last item that I think is interesting here and that is the role that word of mouth marketing had supporting the right strategy.  When there is no advertising campaign for a change in company positioning, the only way that customers can find out about the change is via their friends and family.

Selling 10x the number of jeans does not happen because the person in store buys 10 pairs of jean.  It happens because that person buys two or maybe three pairs and tells their friends.  That is how the soft launch and change in customer experience (low prices) permeates through the customer community.

Prices are lower than people expect and so their satisfaction is higher.  Compare this to the alternative approach when expectations are inflated through the advertising and can only be confirmed, if prices really are lower, or defeated, if prices are not lower.

By Adam Ramshaw

Filed Under: Customer Experience Management, Customer Loyalty Management Tagged With:
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