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: ,

Are you trying to do too many things?

February 16, 2011 By Leave a Comment

I have always stressed to our clients that our goal is provide them with 2 or 3 key customer insights that they can start work on immediately.  Too often customer research firms and consultants seem to bombard their clients with tens or hundreds of pages of analysis and recommendations.  While a big fat report with plenty of graphs and charts may look impressive it just doesn’t work in practice.

The reason that these approaches do not work is simple; any organisation, be it one person, a small team, a division or even an entire company can only focus on doing 2 or 3 things at once.  Any more than that and focus gets too diffuse.  With a lack of focus comes a lack of progress.  Then one thing leads to another and none of the “ten key priorities” gets done.

A much better approach is to focus on doing two or three things.  Get them in and running then pick another two or three things to focus on.  In no time at all you will have all ten key changes made in your organisation.

It seems that recent research supports this approach.  Today’s Harvard Business Review daily stat is that “Fewer Strategic Priorities Is Better.”  Executives in firms that have fewer (one to three) strategic priorities “were the most likely to say that their companies have above-average profitability and growth.”

So how many things are you trying to do today?  Maybe you should prioritise your list and get the top few done first.

By Adam Ramshaw

Filed Under: Best Practices 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: , , ,

How do you make Sales & Marketing Execs sweat? Ask for ROI.

October 29, 2010 By 2 Comments

Guest Post by Chris Peterson

A few weeks ago I commented on Chris’s blog over at Results Count.  I didn’t agree entirely with his position on a couple of items, and he didn’t agree entirely with me.  However, as so often happens we agreed on more than we disagreed on.

One area that we were in violent agreement was a passion for helping our clients to improve their business.  The upshot was a guest post by me over at Results Count and this post by Chris.

How do you make Sales & Marketing Execs sweat?  Ask for ROI.

“C–level” Executives are typically measured and held accountable for bottom-line, P&L contribution margin.  While this is a critical measure of corporate results for top executives, it does not provide the ability to analyze the ever growing “investments” directed toward growing topline revenue.

Sales and Marketing Execs are in the business of improving sales performance.   The EVPs and their managers are not shy about asking for incremental resources to fund special projects, advertising, or promotions.  It would seem logical that such initiatives would be measured on ROI – Return on Investment.  Yet, Senior Managers and even Execs are intimidated when asked for ROI … why?

Fear of Accountability

It is surprising how many corporate cultures simply don’t hold managers accountable for producing a profit return on the millions they invest in ads, media, merchandising, and campaigns, etc.   And, many Execs simply fear exposing themselves to the scrutiny of bottom-line results if not required.   It is far easier and safer to measure activities, impressions and a host of other indices of what they “did”, versus quantifying incremental “results” achieved.

Myth that ROI can’t be measured

The formula for ROI is not rocket science:

ROI =  (Gross margin (profit) on incremental sales (over baseline or comp groups)) / (The total cost of all marketing activities, media and events)

Every manager knows what they spent … if they don’t, they should be fired.   ROI requires measuring incremental sales – the sales uplift over the baseline or comparison groups that did not receive the advertising, activity or event.  The key is comparative measurement of “test” versus a “comp” group, or current performance versus a baseline.  It can be done, but needs to be part of the objectives and design.

Lack of Data Myth

With today’s systems, it is possible to get individual sales by week, day, even by hour.  With location level sales data, it is possible to set up comparison groups and controls.  So it is not the lack of data, but the lack of commitment to employ a simple test vs. control methodology to determine if there are incremental sales and ROI relative to investments.

Burden of Breakeven

In consulting with clients on measuring results, we have found that there is an irrational “burden” and belief that you have to beat “breakeven” every time.   Not all marketing investments will return more gross profit than the investment.  But, the very act of on-going ROI measurement creates a comparative knowledge base of what works better where, and when.

Precision Paralysis

There is an analysis paralysis mentality that measurement must account for every variable to get a precise ROI or P&L.  Debating the minutia of parsing investment cost details, subsequently leads to the “perfect” excuse that ROI can’t be accurately measured.  With this logic, we are back to square 1, and the fundamental reason why ROI isn’t measured – fear of accountability.

We specialize in helping companies analyze marketing, merchandising, training other investments designed to change the customer experience to profitably grow sales.  In reviewing over 200 projects from the last two decades, only 17 managers originally set out to measure ROI.  When they are shown that ROI can be measured, their response invariably falls into one of the five excuses detailed above.

Results Count … everything else is conversation

Regardless of the specific metric, there are five core principles which are essential for the behavior change required to produce and sustain measurable results:

  1. You can’t expect what you don’t inspect.
  2. What gets inspected can be managed.
  3. You won’t improve if you don’t keep score.
  4. What gets measured gets done.
  5. What pays off gets done first.

In today’s economy, the results that count must go beyond revenue growth.  Expecting and inspecting ROI simultaneously focuses these five core principles on two critical dimensions:   “R” – the Incremental gains on the top line, and the “I” – which comprises the multitude of investments directed at customers and converting sales.  The best in class companies also measure “C” – customer loyalty factors critical to sustaining relationships that produce results that count on the bottom line!

What’s your experience with ROI … why do you think that Senior Managers fear or avoid ROI?

Chris Petersen, Ph.D.

Chris Petersen (@ChrisHPetersen), is a founding partner of IMS, a consultancy specializing in analytics and measurement of Results that Count.  For the past 25 years, Dr. Petersen has lead IMS Retail University which has over 13,000 graduates from 34 countries.

Filed Under: Marketing Automation Tagged With:

Do Net Promoters tell us anything?

October 18, 2010 By Leave a Comment

Over the past couple of weeks I have seen quite a lot of negative feedback about Net Promoter Score.  This issue seems to not be Net Promoters as such or how to calculate the score but whether it is a valid measurement at all.

While I’ve responded to a couple of specific blog posts I thought it would be useful to set out those comments in a central place.

Before I start I do need to say that my view of customer management is pragmatic.  In general I believe it to be much better to do something that is 90% right than wait for the perfect solution.  As one of my earliest mentors told me: in management if you get it right 70% of the time you’ll be doing better than most.

It’s not just one number

Net Promoter Score seems to be a victim of its own success in the simplicity that is it’s hallmark.  People seem to have taken the title to Fred Reichheld’s book “The Ultimate Question…“ to heart as meaning there is only one question that holds all the answers.

In truth it isn’t just one question.  The “would recommend” question and conversion to Net Promoter Score is important; important because the NPS score has been shown to correlate with business growth.  This means that it is a useful proxy for customer loyalty, growth, etc. A proxy that is easy to measure capture and link to individual customers.

But that is not enough.  Weighing a pig does not make it fatter .  It does not relieve you of the need to understand how to drive changes in customer perception.

To drive business value you must combine the NPS question with qualitative and quantitative questions that diagnose why the customer has scored you in that way and how you can improve.  The most common way to do this in Transactional NPS surveys is to add a second qualitative question that asks “why” the customer gave such a score.

In much of the Relationship NPS work that we have done for our clients over the past 6 years we have included a range of customer loyalty driver attributes in the in same survey.  Through analysis of the responses we can then understand what it important to the customer.

Using NPS at the output variable makes it easier for the organisation to collect and analyse this information because there is less (no) need to  link customer survey feedback responses to specific  customer behaviour.  You could achieve even better outcomes than using NPS if you were able to link customer survey responses to a customer’s lifetime purchasing behaviour.  Sadly, even using modern ERP and CRM solutions, in practice this is rarely easy and often impossible.

The point is that while NPS is just one question it does not mean that there is only one question that need be asked of customers.

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: Net Promoter Score Tagged With: ,
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