Inside Jobs, February 28, 2008

Customer Experience Domination #4

Lesson #4: Develop the Customer Experience Business Case

• In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results.

• In lesson #2, we showed you how to translate those ideas into an action plan.

• In lesson #3, we taught you how to look for customer experience opportunities in your business.

• In this lesson, we’ll show you how to develop that all important customer experience business case.

If you are reading this, then you know that customer experience is important: Good experiences can increase customer loyalty, profitability, and share of the wallet. However, many companies find that quantifying the customer experience business case can be difficult. As a result, their customer experience projects can fail to get funded, be unpredictable, or fail to realize adequate results.

We recommend that you develop a formal customer experience business case that links the project activities to specific value drivers. Then, use the business case as a management tool, not as another pretty document that collects dust on the shelf.

Step 1: Identify Your Value Levers

Before you begin your customer experience project, establish a clear path for how you plan to improve your customer value. Then, align all related stakeholders and other projects to achieving this common goal. By doing so, you can get your organization moving in the same direction.

A clear understanding of customer value can be a powerful motivator and can spur people to contribute to the goal – even if it may not be in their own best short-term interest. In the end, aligning your customer experience project to tangible customer value metrics can help you find your way to customer experience domination.

Finding your customer value involves identifying which direction that you want to take and what results you want to achieve. Sometimes choosing the right direction can be difficult. The tool that we’ve found to be very helpful in connecting the dots between customer experience strategies and business returns is the ClearBrick Customer Value Compass. This tool provides a clear representation of the customer centric revenue-generating and cost-reduction levers that can contribute to total business returns.

Although we’ll cover the basics here, you can get the complete step-by-step explanation of ClearBrick Customer Value Compass in our report called ‘How to Find Your Customer Value’, which you can get here.

Here’s how the value compass can help you to identify your customer value levers. At the center of any customer experience project should be total returns, which represents the net benefit that is realized by your customer experience project. How you achieve those results is accomplished by pulling (or pushing) on one or more of your customer value levers.

Value levers can represent multiple dimension of business value, but for simplicity purposes we have defined two categories of value levers; revenue-generating levers, and cost-reduction levers. For this lesson, we’ll focus on the revenue-generating levers.

For example, there are three major customer value levers that can influence top-line revenue in your business:

1. Increase DEPTH of Relationships: Increasing the depth of your customer relationships equates to increasing your share of the customer’s wallet. That means that the customer will visit you more often, avoid competitive offers, and go out of their way to work with your company. Establishing deeper relationships with your company can be accomplished by improving customer loyalty and by working more closely with your customer to better serve their needs.
2. Increase BREADTH of Relationships: Increasing the breadth of the customer relationship means expanding your customer base or expanding the portfolio of products or services that you sell to your current customers.
3. Increase DURATION of Relationships: Increasing the duration of the customer relationship equates to retaining your existing customers for a longer period of time, resulting in an increase of total transactions over the lifetime of the customer relationship. This can be accomplished by either enhancing customer care or improving overall retention factors.

Clearly identifying your customer value levers and choosing which ones to target is an important step for any customer experience project. Too often, companies miss the mark with their customer experience projects because their customer value goals aren’t clearly defined, well understood, or aligned with other business initiatives. You can avoid this common pitfall by clearly identifying the value levers that will form the foundation of your customer experience project.

Identify which value drivers make the most sense for your business and take one step closer to customer experience domination.

Step 2: Assemble the Business Case

You should now begin to assemble your customer experience business case. The business case is a cash flow model that reflects the project costs and benefits over time. The business case is often used as a litmus test to determine if the project’s return on investment (ROI) is acceptable in light of the potential risks.

The business case should include both tangible and intangible costs and benefits to be achieved by the project. Remember the value levers that we identified in step 1 – they will be used to create the foundation of your business case.

Often, the more details that you can incorporate into the business case, the more accurate the model will be. Value levers can get you started. Value levers can be defined in more detail by outlining the value ‘drivers’ that influence each lever. Value drivers can also be defined in more detail by identifying value activities, and so on, until you get to the lowest level metric that contributes to customer value. Also consider creating business case scenarios such as best case, expected case, and worst case to model potential variances in both cost and benefit factors.

To learn more, get our complete report titled ‘How to Build Your Customer Experience Business Case' now.

As you develop your business case, take into consideration the core factors that will impact the overall value potential for your project:

• Time & Approach: Your project approach will often determine the pace at which resources and funding are consumed. For example, a more aggressive approach may require more resources and funding.
• Resources: Executing projects require resources to get the job done. The primary and most critical resource is often people, but resources may also include the utilization and availability of property, equipment, and systems. Often, but not always, the more resources deployed on the project, the quicker that it can be completed. More resources, however, also equates to more funding.
• Funding: Funding is a key to the other factors of the business case. Funding can determine how many resources can be utilized on the project.

Establishing your business case typically means finding an acceptable balance between time, resources, funding, and scope. It is important to identify up front which of these factors can be flexed, if necessary, once the project is underway. For example, a project that has a hard and fixed timeline must be willing to flex funding and resources to get the job done. Conversely, a project with fixed funding will most likely need to flex the timeline and resources to fit within the budget.

The business case should identify the specific costs and benefits associated with your customer experience project. All estimated costs and benefits should be updated with actual amounts once they are realized. As such, the business case should become a living model that is updated throughout the project.

The purpose of the business case is to weigh the project costs against the anticipated project benefits. Ideally, you want the cumulative project benefits to exceed the costs. Obviously, your goal should be to deliver a profitable project.

A simple and proven method for evaluating the value of your project is to model the cost and benefit cash flows over time. Then calculate the net present value of the net cash flows to determine the Net Present Value (NPV). A higher NPV represents a more profitable project. If the NPV is close to zero, or negative, then you should go back to step 1 to identify additional value levers that could potentially yield better benefits.

Step 3: Use the Business Case as a Management Tool

Many companies realize that the business case is a critical tool to help identify, model, and measure the results of any project. However, many companies fall into a fatal trap; they develop the business case only for project approval – then set it on the shelf to collect dust during the project. Along the way, they may make management decisions that are inconsistent with the business case – and the results are either not measured, or vary significantly from what was planned.

ClearBrick recommends that companies use the business case as a management tool. Keep the business case up to date and review the status of costs and benefits at every project status meeting. By doing so, you can review and gauge your progress against the business case and make the proper adjustments along the way. After all, achieving the results of your business case is a clear way to measure whether or not you’ve reached your goal.

Using the business case as a management tool should be a common practice for all customer experience projects. Companies can use the business case as a management tool by following a few simple tips:

• Align your stakeholders to a common measurable goal. Without a common goal, seemingly unrelated efforts can dilute the potential results of your efforts. Make sure that everyone is aligned to achieving the same goal.
• Modify or expand on the customer value drivers provided. Use the list of customer value drivers provided in the Customer Value Compass to get started. Then expand or customize them to fit your own company’s unique needs and opportunities.
• Create a detailed business case that incorporates tangible customer value benefits. Use the customer value drivers as the foundation of a detailed business case, then measure progress against your business case as a key management tool.

As simple as it sounds, too often customer experience projects miss the mark on improving customer value. If customer value goals either aren’t clearly defined, well understood, or aligned with other business initiatives, customer experience projects can get off track and fail to fully realize their intended results. Improve your results by establishing a clear and common understanding of how you plan to improve your customer value.

That wraps up Lesson #4. To recap our lesson, the three steps that we covered included:

1. Identify Your Value Levers
2. Assemble the Business Case
3. Use the Business Case as a Management Tool

Stay tuned for Lesson #5, where we’ll cover the basics of effective customer experience project management.

Inside Jobs, February 21, 2008

Customer Experience Domination #3

Lesson #3: Identify Customer Experience Opportunities

In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results.

In lesson #2, we showed you how to translate those ideas into an action plan.

In this lesson, we’ll show you how to look for specific customer experience opportunities in your business. After all, it’s hard to fix it if you don’t know what’s broken.

Step 1: Give Your Customers Some Personality

Whether you’ve just started your company or have been in business for a while, you know that establishing and maintaining a clear value proposition is critical. When your company launched its products and services, there was probably a very clear value proposition that matched the product or service with a specific customer want or need.

Unfortunately, things can change; competing products are introduced, competitors reposition, and customer perceptions shift. Over time, these changes can blur your company’s value proposition to the point that there is no clear value proposition at all. If you ignore these changes, you can find yourself chasing the competitor’s tail or wondering why your sales are flat or declining.

Staying abreast of the ever-changing conditions of the market requires continuous exploration. That means creating a capability to identify and anticipate emerging customer needs more accurately and more quickly than your competitors. Your company will benefit by having more profitable products and services. Your customers will love you for anticipating their wants and needs and being a market leader.

The best way to identify potential opportunities is to develop a more meaningful definition of your ideal customer. A proven and effective way of doing this is to create a detailed set of customer profiles for your business.

Customer profiling can be a powerful tool to help your company better understand and anticipate the needs, actions and preferences of your target customers. This begins by creating a customer profile with enough details to provide your company with the information and insight necessary to become more empathetic with what your customer really wants. Customer profiling is a method for putting a personal touch to major customer segments that you are targeting.

An effective customer profile contains several elements: a) key customer demographic attributes, b) socio-economic attributes, and c) a description of the customer’s perceptions and behaviors. It is also useful to name each profile and attach a representative image, as appropriate, to give each profile a more personal identity. These profiles can then be used to tailor specific products, services, and marketing messages for the unique needs of each profile.

Each customer profile should represent a unique customer dynamic. Evaluate how well your products or services deliver on your brand promise and fulfill their want or need. This is the time to be honest; any gaps that you identify are important to close.
Developing your own customer profiles doesn’t have to be rocket science.

Here’s what I recommend if you are new to customer segmentation:

1. Assemble a master list of customers. Begin by assembling a master list of customers from the appropriate sources in your company. If possible, include transaction or revenue information by customer.
2. Sort your customers into logical groups. Sort your customers into discrete groups based on logical attributes for your business. To keep it manageable, seek to identify 3-5 major groups that represent the majority of your target customer base. For example, you may group by sex, age group, income level, ethnicity, and/or basic needs.
3. Give your segments a personality. For each discrete group, assign a name and short description that describes their typical perceptions and behaviors. This will give each segment a unique personality that will help you to focus specific product & service attributes and marketing messages.

By identifying key segments and assigning a more personal profile to each one, the segments begin to take on their own personality. For example, Segment A may consist of elderly women in the middle income bracket who have an average of 3.5 grandchildren. Not very personal is it? Now, let’s give this segment a personality. We’ll call her Elsie, and describe her as a conservative grandmother who is on a fixed budget but is willing to spend money on unique toys and gifts for her grandchildren.

Now you can begin to incorporate these personalities into your business. How well does your marketing material speak to Elsie? Are your products and services tailored to Elsie? What else can you do to improve Elsie’s customer experience? What is the best channel and medium to stay in contact with Elsie? Answering these questions for each discrete customer profile can be a powerful tool for identifying customer experience improvement opportunities.

Step 2: Identify Where It Hurts

In the software industry, a defect or problem in the software is called a ‘bug’. The quality of any software solution is often judged by the total number of ‘bugs’ encountered by the customer.

The same is true for customer experience quality. Customer experience is adversely affected when things don’t go as planned; when the process doesn’t work as planned, customers get frustrated, confused, or simply give up altogether.

The answer: Apply six sigma principles to your customer experience process.

What is a Six Sigma Customer Experience? Six Sigma is a measure of quality that represents near perfection. Statistically speaking, it means that your customer experience process encounters no more than 3.4 defects per million opportunities. Practically speaking, it means that your customer experience works (nearly) perfectly. Things just work, problems rarely happen, and your customers are very, very happy.

Let’s face it: All too often, we have bad customer experiences. With touch points scattered across channels, new or untrained employees, and geographic separation, too many things can go horribly wrong. It doesn’t have to be that way. The customer experience is a process, so treat it like one.

Great customer experiences don’t happen by accident. Make it intentional. Model it. Redesign it. Optimize it. Measure it. Minimize unexpected variations. Continually improve its quality. By taking a process-centric approach to customer experience, you can be in control of your customer experience process and eliminate the root cause of problems.

You can begin to identify your own customer experience issues and opportunities by clearly defining and analyzing the touch points and scenarios that make up your customer experience:

1. For each stage in the customer experience process, identify the distinct customer facing events or interactions that occur with your customers. Each descrete point of encounter is a touch point.
2. Describe each touch point in detail (who, what, how, where, when).
3. Identify the key stakeholders that may participate in each touch point.
4. Define the touch point characteristics including attributes such as quality, relevance, timeliness, performance, and convenience.
5. Analyze the touch point portfolio to evaluate quality, complexity, and performance. Do certain touch points meet their objective better than others? Which touch points contribute, or detract, from the customer experience?
6. Review or research the target customer group’s buying behaviors, criteria and touch point navigation preferences. Do different customer segments prefer to navigate your touch points differently? Think about the profiles that we developed in Step 1 of this lesson.
7. Define each distinct touch point path as a unique scenario. Does each scenario pose different challenges for your company?
8. Describe the scenario’s characteristics including attributes such as efficiency, convenience, timeliness, consistency, transitions, and simplicity. Are there points in the scenario that break down or are bottlenecks?

Discretely defining your customer touch points and customer scenarios will enable you to take an important step towards becoming more disciplined in customer experience management. Think about which touch points are causing problems; which ones can be eliminated to streamline the process; and which ones are duplicated across multiple locations. Consider which scenarios are preferred most by you customers; and which scenarios often result in lower customer satisfaction. By analyzing the various customer touch points and scenarios, you should begin to identify a laundry list of potential improvement opportunities.

Take what you’ve learned about your customer experience process and begin to think like an exterminator: eliminate the bugs.

Step 3: Listen to Your Customers

So far, what we’ve covered has been somewhat academic. We’ve covered the blocking and tackling aspects of customer experience management. But don’t underestimate the voice of your customer. Make sure that you reach out to your customers and listen to what they have to say. Ideally, getting customer feedback should be a habit, not just a one-time affair. Here a just a few of the proven methods for collecting customer feedback:

1. Focus Groups
2. Direct Mail Surveys
3. Web-Based Dialog (blogs, webinars, emails)
4. Interactive Surveys (in person interviews with the customer)
5. Customer observation
6. Telephone Surveys

What should you ask them? There are literally hundreds of resources available to help you design and conduct customer satisfaction surveys.
Here is a short list of some tried and true questions for your customers:

1. How did you hear about us? (Identify which attraction method worked)
2. How long have you been a customer? (Indicates customer longevity and loyalty)
3. What was the best thing about your customer experience? (Identify the good)
4. What was the worst thing about your customer experience? (Identify the bad)
5. Would you shop with us again? (Gauge ongoing loyalty)
6. Would you recommend us to other people? (Determine degree of advocacy)
7. Why did you choose us over the competition? (Identify your differentiation)
8. How well did the product/service meet your needs? (Determine product/service quality)
9. What one thing should we do differently? (Identify opportunities for improvement)
10. Do you get the value that you expected? (Determine if expectations were met or exceeded)

The feedback that you receive from your customers is invaluable. Incorporate what you learn from your customers into your customer experience into your list of improvement opportunities.

By now, you should have a list of improvement areas from a) your identification of customer profile gaps, b) your assessment of touch points and scenarios, and c) customer feedback.

That wraps up Lesson #3. To recap our lesson, the three steps that we covered included:

1. Give Your Customers Some Personality
2. Identify Where It Hurts
3. Listen To Your Customers

Stay tuned for Lesson #4, where we will help you to develop that all important customer experience business case.

Inside Jobs, February 14, 2008

Customer Experience Domination #2

Lesson #2: Define the Customer Experience Vision

In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results. In this lesson, we’ll begin to translate those ideas into action. At the end of the day, we all know that actions speak louder than words. In order to get results, you must put your ideas into action.

As business professionals, most of us are good at coming up with new ideas. The problem, however, is that an idea is just a dream, a wishful thought, or a passing fancy without putting it into action. Even a mediocre strategy can generate real results if it is implemented properly. A great strategy that sits on the shelf, however, will undoubtedly do nothing more than collect dust and die. That is why we turn our attention now to getting the ball rolling.

In this lesson, we cover the basics of defining the customer experience vision; a vision that is specific, measurable, and actionable. We begin by defining a specific and common goal. Then, we discuss how to define the specific key metrics that will help you measure the results. And finally, we discuss how to get your executive team on board to support the initiative going forward.

Step 1: Develop a Common Customer Experience Goal

We’ll begin by defining a common goal for your customer experience project. At ClearBrick, our approach to customer experience is process-centric. We believe that the underlying goal of any customer experience initiative should be to optimize your overall customer experience process; not just one element or touch point, but the entire end-to-end process. The specific details of what that means for your business may depend on your industry or specific marketplace. But make no mistake, establishing a common goal for your project is critical.

Let me explain; even if you’re not a fan of international soccer, you’ve probably heard the emphatic cry from the Univision sports announcer when a football club scores a ‘gooooooaaaaaal.’ You see, setting and achieving goals (pun intended) is just plain exciting. Everyone gets into it. Everyone is focused on the goal and contributes in any way possible to achieve it.

That’s the power of a good goal. It can get your organization focused and moving in the right direction. More importantly, it can get your organization moving in the same direction. A clear goal can be a powerful motivator that gets people to contribute to the goal – even if it may not be in their own best short-term interest. Being part of a group or organization that has a clear goal can also contribute to employee satisfaction – because they feel like a member of a team that is out to achieve great things. Nobody wants to let his or her teammates down. Ultimately, achieving the goal is celebrated and rewarded, it re-enforces good behavior, and provides the team with a sense of accomplishment.

“You can’t expect your business to get on board unless you can tell them where you are going.”
There have been countless business discussions and books on goal setting. Let’s review a few of the basics of good goal setting:

1. Goals need to be measurable: A broad or generic goal just won’t rally the troops. Make your goal something that is measurable or tangible. For example, the goal of ‘Improving the Customer Experience’ is not a measurable goal. Whereas, increasing your customer retention rates by 10% or more is measurable.
2. Goals should make them stretch: Goals should be inspirational. They should challenge your team and they should perceive it as worth the effort. Simply put, cutting office supply expenses by 5% is not inspiring. Whereas, providing the best value in the industry is inspirational because it represents a goal to be the undisputed leader. That is something the team can rally around – no matter how large the gap.
3. Goals should be achievable: Goals should also be achievable. A stretch goal that is not perceived to be achievable by the team won’t be adopted wholly. Too many people may have the tendency to give up
4. Goals should clearly connect the dots: Goals should clearly identify the cause and effect relationships necessary to achieve the goal. For example, delivering the fastest service in the industry may mean streamlining the order entry, order fulfillment, and order delivery processes. Go ahead and connect the dots. Don’t assume that the team will figure it out.
   

For your customer experience project, make sure that you establish a clear goal. Communicate and test the goal with your team. Make sure that the goal is in line with your overall corporate strategy and align your entire organization to the goal. It’s also ok to set a generic goal up front, as long as you define it in more detailed and measurable terms once the initial analysis and business case are complete.

Goal setting can be an important part of any business culture. There is a distinct difference, however, between good and bad goals. A bad goal is one that is vague, unclear, or not easily measured. A good goal follows the SMART principle; they are Specific, Measurable, Achievable, Realistic, and Time-bound.

Getting results with your customer experience project will rely heavily on your ability to set SMART goals for your business and your team. Setting SMART goals begins with focusing on the right key metric for your business.

Step 2: Focus on the Key Metric

Regardless of your business industry or marketplace, success or failure is defined by your results. Understandably, results can mean a lot of different things to different organizations, but often every business relies on a very short list of key metrics that define success or failure.

In my experience, I’ve found that many large organizations jump to the seemingly obvious conclusion that any customer experience project must measure customer satisfaction, advocacy, and/or loyalty. Those metrics are the ultimate measure of the success of your customer experience project. However, these metrics won’t reveal what aspects of the customer experience contribute or detract from customer satisfaction. To truly understand how to improve customer satisfaction, you will need to focus on a more telling metric:

Focus on your conversion rates.

Let me explain; for each phase of the customer experience lifecycle, we may deal with slightly different metrics. During the Customer Attraction phase, we may focus on the click-through-rate (CTR) of our on-line ads, the response rate of a direct marketing campaign, or the amount of exposure provided by one of our free articles. Those are all interesting metrics and may very well provide us with some insights where our customer experience may be breaking down. Perhaps the ad doesn’t resonate with our target customers, or the direct marketing campaign didn’t effectively fulfill the customer’s needs. Those are important aspects to consider but they are not the most important. The most important metric should be conversion.

In lesson #1 we taught you how to define the customer experience lifecycle as an end-to-end process. The end-to-end process will demonstrate how the customer traverses various touch points in your business. Each transition from touch point to touch point represents the potential for conversion – or defection. Successfully moving your customers from one touch point to the next is called conversion.

“You get what you measure.”

You may measure conversion at a number of different points in the customer lifecycle. From a pay-per-click standpoint, measure conversion as the number of clicks divided by the number of impressions (or click-through-rate). Once customers visit your landing page, then you must measure the rate at which they convert into a product purchase or download. If a customer downloads a free product, you want to measure the rate that you can convert them into a paying customer.

For example, you can measure the conversion rate as the number of product purchases (free or for a fee) divided by the number of total visitors for a given time frame. For example, if 2,000 people visit your site in a given month and 100 people obtained one of your products, then you achieved a conversion rate of 5%. As you might expect, the conversion rate will differ between free products and for-fee products.

Focusing on this key metric provides you with several benefits. First, it provides you with a benchmark from which you can improve. In our example, improving on a 5% conversion rate is an easy metric to focus on. Secondly, you can begin to identify the touch points of your customer experience process that may be contributing, or detracting, from this key metric. For example, you may determine that you do fine in getting customers to your web site, but if they flee at a high rate (also called the bounce rate), then you know that you are missing the mark with some aspect of the landing page. Finally, and perhaps most importantly, you can calculate the per-customer acquisition cost and customer profitability. For example, in our example, only 10 out of every 2,000 visitors actually bought a product. If acquiring those 2,000 visitors cost us $1,000, then the average sale per customer must be $100 just to cover the acquisition costs. We may determine that we’re spending money to acquire the wrong customers; customers that aren’t serious buyers of our products and services.

Ultimately, focusing on customer conversion can provide a very real and tangible measure of your customer experience process efficiency and effectiveness. Streamlining your customer experience process to optimize customer conversion will directly impact customer satisfaction and loyalty. If you can attract the right customers and deliver what they want and need in an efficient manner, customer satisfaction and loyalty metrics will soar.

Step 3: Get Executive Alignment

You can’t fix your customer experience in a vacuum. The customer experience process, by nature, will span nearly every department and function in your organization. To achieve meaningful and lasting results, it is paramount that you get the executive team, and your project team, on board and aligned with the customer experience vision. Without executive alignment, your customer experience efforts will lack the support, funding, and resources necessary to achieve meaningful results.

“Get the head moving in the right direction - and the body will follow.”

Getting executive alignment doesn’t have to be difficult. We’ve found that there are five key ingredients that can help to get your executives on board, many of which we covered in Lesson #1:

1. Identify and overcome the key customer experience pitfalls: Be prepared for your executive pitch by identifying and understanding how to overcome some of the most common customer experience project pitfalls.
2. Develop a common understanding of the customer experience process: Define a process model that demonstrates in clear terms what customer experience means to your company.
3. Identify a compelling strategy: Identify and define a compelling strategy and vision. When done right, a provocative strategy can sell itself.
4. Identify compelling results: Numbers can speak louder than words. Do the math to demonstrate the value of delivering a better customer experience.
5. Focus on key metrics: As we discussed earlier in this lesson, dig down to understand how conversion rates can tell the story of what people like, or dislike, about your customer experience process.
   

By using these five key ingredients, you should now have the attention of your executive team. Ideally, you should seek to identify an executive sponsor for your customer experience project; an individual that posesses the authority and responsibility to navigate the intricacies of any cross-functional project. The executive sponsor will serve as the primary customer experience advocate. Getting the commitment of the executive team is critical due to the nature and makeup of a typical customer experience project.

You can kick start the executive alignment process by getting the Customer Experience 101 on-demand seminar here.

Don’t take executive alignment for granted. This is not a one-time exercise. Rather, executive alignment requires a real and ongoing commitment on the part of executive and customer experience leaders to continually discuss, adapt, and reiterate their support throughout the project lifecycle. As with any project, issues will undoubtedly arise. Maintaining strong executive alignment and support is the only way to effectively navigate those issues and keep your customer experience efforts on track.

That wraps up Lesson #2. To recap our lesson, the three steps that we covered included:

1. Develop a Common Customer Experience Goal
2. Focus on the Key Metric
3. Get Executive Alignment (Value Proposition)
   

Stay tuned for Lesson #3, when we will dive into the details of how to identify your customer experience areas of opportunity.

Customer Experience Domination #1

Lesson #1: Create a Sense of Urgency

NOTE: You’ve heard me rant about the value that Customer Experience Management can generate for any business. I truly believe that Customer Experience Management (CEM) is the next competitive battleground where businesses will commit vast resources to capture the hearts, minds, and wallets of the ever-elusive customer. Those companies that get it right can establish an emotional connection with their customers that can boost their revenues and profits – even when the economy gets soft. Those that don’t, will languish.

Over my 20-year career, I’ve seen too many businesses miss the mark. I want to see all businesses be wildly successful; especially businesses that may not be able to afford or access world-class consulting services. That’s why I’m providing these courses for free. If you follow everything outlined here, you too can see your business soar.

Before you begin, you must be 100% committed. If you’re not absolutely serious about improving your customer experience, then go back to surfing the Internet or watching YouTube. Only read on if you plan to utilize the valuable information that I am about to provide to you. If you do, you too can capture the incredible power of customer experience management for your business.

Now, on to lesson #1…

If you are involved in a business in any capacity, then you know that in order to get things done – there has to be focus and commitment. Getting that focus and commitment is often easier said than done. Other commitments can distract executives and team members aren’t motivated to go the extra mile. This is the main reason that projects never get started, fall behind schedule, get off track, or fail altogether.

To get your customer experience project off the ground, you must create a compelling sense of urgency.

“Fail to create a compelling sense of urgency
and your project will languish”

Step 1: Identify the Common Customer Experience Management Pitfalls

This year thousands of companies will take on a customer experience project. But with CRM project failure rates reaching as high as 75%, some might ask ‘why bother’? The answer is simple; the benefits of doing it right are significant.

Companies that successfully develop and maintain a unique customer experience are far more likely to have significantly higher customer loyalty and advocacy than their counterparts. Products and services can be replicated, but a unique customer experience can establish a competitive advantage that is difficult, if not impossible, to overcome. As a result, the stakes are high and companies will seek to gain a first mover advantage in customer experience regardless of the potential for failure.

Smart companies can improve their chances for success by identifying and overcoming the common pitfalls that besiege many customer experience projects.

My experience has shown that most companies fall victim to five common pitfalls that can spell doom for your customer experience project if not properly managed. They are:

1. Maintaining Inside-Out Thinking: Sticking to the build-it-and-they-will-come philosophy can be a dangerous habit. Learn to overcome this habit and improve your chances for customer experience success.
2. Lack of Ownership: As with any major project, effective leadership can mean the difference between success and failure. Overcome this deadly pitfall by getting the right leaders on board.
3. Losing Touch: Companies can sometimes lose touch with their customers’ wants and needs. Smart companies dig deep, continuously, to understand why and how people buy and use their products and services.
4. Lack of Clarity: Too often, companies define the lifecycle and customer touch points too narrowly – leaving critical elements of the customer experience to chance. . If you can’t develop consensus around what customer experience means to your company, your project will likely languish.
5. Losing Sight of Profitability: Many companies lose site of customer profitability and financial results. If your company doesn’t have a handle on individual customer profitability, your customer experience project will have only mediocre results.

You can learn more about each of these potential pitfalls – and how to overcome them – in our report titled “How to Overcome the Top 5 Customer Experience Project Pitfalls.”

You can purchase this report online by clicking here.

Identifying the common pitfalls is an important first step in creating a sense of urgency for your customer experience project. Presenting business leaders with the grim picture of what can happen with a lack of customer focus can be a powerful motivator.

Step 2: Develop and End-to-End Perspective

If your business is like most, you probably jumped on board the Customer Relationship Management (CRM) bandwagon at the height of its 'hype' in the late 1990's and early 2000's. During that time, I often asked companies if they had implemented CRM in their business and they almost unanimously answered 'yes!' But when I dug deeper, I found that it was often only a partial solution.

"We implemented a new call center solution!" one company would say.

"We optimized our loyalty program!" another would say.

What became painfully clear was that most companies implemented only a point solution to address one finite touch point in their organization. If the project was even remotely successful, which more times than not it wasn't, the company would declare CRM victory and quickly focus their attention to other areas of the business.

They failed to grasp the bigger picture; customer experience is an end-to-end process that begins with customer attraction, flows through interaction, and ends with cultivation – where the process starts over.

A critical first step for any customer experience project should be to map out the entire customer experience lifecycle. By doing so, you and your company can develop a deeper appreciation for how your business appears to, and interacts with, your customer. This exercise is also an important step in identifying the multitude of break points that can detract from the customer experience.

One best practice that I would recommend is to develop two end-to-end processes; 1) a current state (or as-is) process model, and 2) a future state (or to-be) process model. The current state process is a powerful tool to help clearly demonstrate just how bad the customer experience can be today. I’ve seen this tool used effectively to send business executives clamoring for a quick fix. Likewise, the future state process model can be a powerful tool to create a sense of urgency. It can paint the picture of what the customer experience should be like, if everything and everybody worked perfectly together to fulfill the customers’ needs. Together, these process models can quickly demonstrate the missed opportunities in the customer experience lifecycle.

I would highly recommend that you be creative during this process. There are very few people in the world that actually get excited about flowcharts or generic use-case diagrams. Most people need to visualize the process in order to effectively understand it. I’ve found that one of the best ways to do this is to use storyboarding to bring the customer experience process to life.

We have created a set of fully illustrated customer experience process maps for this very reason. Our process maps are colorful and illustrate the path that a customer takes as they progress through the customer experience lifecycle. This modeling concept, also referred to as ‘A Day In The Life’ model, is designed to facilitate meaningful diagnosis and discussion in order to establish consensus about what is, or is not, working.

You can purchase ClearBrick’s fully illustrated process maps here.

You can use these process modeling and diagnostic methods to create a compelling case for changing your customer experience capabilities.

Step 3: Identify a Compelling Strategy

Getting your business motivated and aligned on a customer experience management initiative is perhaps best achieved by identifying a compelling idea or strategy. You need an idea that can differentiate your business in the market. Otherwise, you may find your business being viewed as a simple commodity in the marketplace; an uncomfortable position for nearly any business.

The antidote: be different.

Michael E. Porter defined the differentation strategy as “creating something that is perceived industrywide as being unique.” More importantly, it means creating something that is perceived different in your customer’s mind.

Don’t just jump on the ‘me too’ bandwagon. Work to identify compelling differentiation strategies that will make your customer experience truly unique in the marketplace. Not only will you stand out in your customer’s mind, you’ll be more likely to get your executives on board to commit to the effort.

To get the ball rolling, I recommend that you facilitate brainstorming sessions to identify potential strategies that can help to break your business out of the pack. Coming up with unique ideas can be difficult at times. That’s why we created a series of strategy booklets that serve as thought-starters. Not only do they help to provide a framework for customer experience management, they offer several strategies to help get the thought process rolling.

A few strategies, for example, include:

• Stretch the Box: Look at what your company does for a customer in the context of their total needs network. Then determine if there are areas where you can expand your products and services to fulfill a larger portion of the customers’ needs.
• Be Different: You can differentiate your product or service, your customer experience, or both. Differentiate only one of these dimensions and any gain you experience may be fleeting. Differentiate both and enjoy a lasting and enviable market leadership position.
• Show You Care: Poor customer service is the leading cause of customer defection. Keep more customers for longer by showing them you care. Don’t let policy or procedures get in the way of truly meeting the customers needs.
• Do the Dance: Every customer experience is made up of a series of touch points. The customer scenario represents the unique path that a customer may take while navigating your touch points. Becoming a master at customer scenario management can make all the difference between customer experience success and failure.
• Be An Exterminator: Take a Six Sigma approach to customer experience management. Six Sigma is a measure of quality that represents near perfection. A Six Sigma approach focuses on identifying and eliminating customer experience ‘defects’ in an ongoing effort to achieve customer experience perfection.

Identifying which customer experience strategy is most appropriate for your business is entirely up to you. However, I recommend that you look around to see what other best practices might fit in your business. Gathering ideas from other industries can often provide an interesting perspective.

We offer a number of potential strategy thought-starters in our strategy booklets that can be purchased online and downloaded immediately.

You can get started with your own customer experience strategy by downloading them here:

1. Five Customer Strategies That Can Work For Your Business (Free)
2. Make Your Customer Sing! Tips for Improving Your Customer Experience
3. Get Attractive: Tips for Improving Your Customer Attraction Capabilities
4. Get in Touch: Tips for Improving Your Customer Interaction Capabilities
5. Cultivate What You Sow: Tips for Improving Your Customer Cultivation Capabilities

Step 4: Identify Compelling Results

By now, you should have developed your end-to-end customer experience process and identified your unique customer experience strategy. Now, it’s time to demonstrate the tangible value that your business can achieve by implementing on that strategy by creating your customer experience business case.

Certainly, by now you realize that customer experience is important: Good experiences can increase customer loyalty, profitability, and share of the wallet. Unfortunately, many companies treat the customer experience as more art than science – and art can be difficult to quantify and measure. As a result, companies tend to rely on customer satisfaction, opinion and perspective as a surrogate for measuring the quality or effectiveness of the customer experience. However, demonstrating the return on customer satisfaction can be difficult – leaving many projects to conclude with few – if any – tangible results.

Companies can yield better results from their customer experience projects by linking the art and science of customer experience in a formal business case.

Companies can yield better results from their customer experience projects by linking the art and science of customer experience in a formal business case. An effective customer experience business case must link the art of customer experience with the science of traditional financial metrics such as revenues, profit, and cash flow.

To assist companies with this linkage, we developed the Customer Value Compass; a tool that links customer experience activities and initiatives to tangible value drivers. By doing so, the art and science of the customer experience can be more readily modeled in a formal business case.

Companies often recognize that customers are their most valuable assets. Maximizing the value of those assets, however, requires a keen understanding of what the customer values and how specific actions by the company can improve total customer returns. Companies with the discipline to identify and improve their specific customer value levers will realize a higher return on investment for their customer experience projects.

Identifying which customer value lever to improve can be unique to each customer, company, industry and marketplace situation. ClearBrick developed the Customer Value Compass to help companies to navigate their way to customer value. You can use the value compass to create the framework for your own business case.

You can get our complete guide on how to build your customer experience business case here.

I think it goes without saying that numbers can often speak louder than words. A business case that outlines specific attainable results can be the most compelling argument for improving your business case. Business leaders often speak the language of money and speaking their language can quickly get the ball rolling.

If you missed my earlier article on the compelling value of customer experience management, you can read it here.

Go ahead, make your case. Your business leaders would be fools to ignore the cold hard facts; customer experience can yield significant results.

That wraps up lesson #1. To recap our lesson, the four steps we covered included:

Step 1: Identify the Common Customer Experience Management Pitfalls
Step 2: Establish an End-to-End Perspective
Step 3: Develop a Compelling Strategy.
Step 4: Identify Compelling Results.

Stay tuned for Lesson #2, which will provide you with the next step in the customer experience journey, is titled “Define the Customer Experience Vision”

Inside Jobs, February 6, 2008