Inside Jobs, March 27, 2008

Customer Satisfaction Drops Again

Customer Satisfaction Drops Again and Consumer Spending Likely to Weaken Further, According to ACSI

Satisfaction in the Retail and Financial Services Sectors Falls, while E-Commerce Reaches All-Time High

ANN ARBOR, Mich. (February 19, 2008) – Customer satisfaction with the goods and services that Americans buy declined in the fourth quarter of 2007, according to a report released today by the University of Michigan’s American Customer Satisfaction Index (ACSI). The index falls to 74.9 on the ACSI’s 100-point scale, down 0.4 percent to its lowest score of 2007.

Consumer spending growth slowed in the fourth quarter as predicted by the third quarter drop in ACSI. A second consecutive drop in customer satisfaction, combined with increasing unemployment, plummeting house prices, tighter credit, high levels of household debt, and inflating fuel and food prices, is likely to pose even more challenges this quarter for consumer spending growth.

“Falling customer satisfaction has a dampening effect on consumer demand, and household debt to income ratios affect consumers’ ability to spend. Both are moving in the wrong direction, brewing up a double-whammy that may hit the economy hard said Claes Fornell, head of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “In such an environment, customer satisfaction becomes even more important because satisfied buyers tend to reduce sellers’ cash flow volatility.”

ACSI measures retail, finance and insurance, and e-commerce every fourth quarter.

Retail: Nordstrom back on top; Wal-Mart’s woes; Home Depot down again

Customer satisfaction with the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal care stores, slips 0.3 percent to 74.2 on ACSI’s 100-point scale.

The holiday shopping season was anything but bright for many retailers, as satisfaction with the department and discount scores reached its lowest level since 2001 after sinking 1.4 percent to a score of 73. With rising gas prices, a shaky credit market and an uncertain job market, cautious consumers are looking for more value for their money.

Nordstrom succeeds where Wal-Mart hasn’t. Nordstrom is reintroduced to ACSI after increasing its market share, and it leads the department and discount store industry with a score of 80 as a result of high quality merchandise and superior customer service.

Discount store giant, Wal-Mart, takes a sharp turn south, plummeting 6 percent to its all-time low of 68, well below the industry average. Competing on price is no longer enough to offset lagging quality. Wal-Mart also scores lowest in the industry for customer service.

Deep discount store Dollar General makes its ACSI debut with a strong score of 78, providing customers with a wide variety of merchandise in a reasonably small store-space at super discount prices.

The specialty retail category aggregate remains unchanged from last year with a score of 75. The category expands this year to include category leader Barnes & Noble (83), Borders (81), Office Depot (78), Staples (77), Office Max (76), Gap (75), and the TJX Companies (74).

Home Depot (67) lost the gains it made last year after sliding 4 percent to the bottom of the whole retail sector. Lowe’s improves 1 percent to 75, widening the gap between the rivals.

“Operational efficiencies don’t always translate into customer service improvements,” said Fornell. “Cutting jobs and eliminating services might improve earnings in the short term, but it won’t do much good if customers take their business elsewhere.”

The gap between consumer electronics retailers Best Buy and Circuit City has narrowed after moving in the opposite direction last year. Best Buy slides 3 percent to a score of 74 while Circuit City improves 3 percent to 71. Circuit City has reduced price on some items and expanded home installation and tech support service.

Supermarkets are up 1.3 percent to 76, the highest level in 14 years, despite the recent rise in food prices. Publix continues to lead the category with a score of 83. According to their customers, Publix, like Nordstrom, offers high quality products and superior customer service, which has been the foundation for the lead in customer satisfaction over the past 15 years. Winn-Dixie plunges 7 percent to tie Wal-Mart’s supermarket business at the bottom of the industry at 71. Whole Foods Market makes its ACSI debut with a score of 73, leading in quality but at the bottom for value.

Finance: Banks, Property Insurance Pay-off, Health Insurers look Ill

Amid fears of a recession, the looming mortgage crisis, and high insurance premiums, the finance and insurance sector drops 0.7 percent to 75.5, a retreat from the gains last year that put the sector at its highest level since 1994.

Banks climb 1.3 percent to 78, lead by improvements in the “all others” category, up 3 percent to lead the industry with a score of 80. Wachovia, down 1 percent to 79, is still the top scoring bank, despite its first drop since 2000. JPMorgan Chase climbs 3 percent to 74, and Bank of America is unchanged at 72. Wells Fargo and Citigroup each drop 4 percent to 69, the lowest scores in the industry.

The property and casualty insurance industry improves 2.6 percent to 80, its highest score in over a decade. Progressive (79) makes the biggest jump of any company, up 8 percent to 79. Various website improvements and rate cuts helped fuel the recent surge in customer satisfaction. State Farm is tied at the top with the All Others category at 81. GEICO and Farmers are the only two companies to slide since 2006. GEICO slips 4 percent to 80, while Farmers falls 3 percent to 76. Allstate remains unchanged at 78.

As health care costs continue to rise with more households now footing the bill, the satisfaction with health insurers slips 1.4 percent, to 71. UnitedHealth declines the most, down 4 percent to 65.

E-Commerce: Amazon is King in Customer Satisfaction

The e-commerce sector rises 2.0 percent to a new high of 81.6. In the highly competitive e-retail category, Amazon.com leads with a score of 88, one of the highest regardless of industry. Amazon.com has been successful at keeping pace with increasing customer expectations and improving the customer experience accordingly. Newegg, Netflix, and Overstock make their first appearance in the e-retail category this year. Newegg (87) and Netflix (84) debut just behind Amazon, while Overstock’s first appearance is at the bottom of the industry with a score of 80.

The online brokerage category also advances 1.3 percent to 79, a new high despite a shaky stock market. Fidelity leads, up 5 percent to 84, a new all-time high for the company. Another strong gainer, TD Ameritrade, climbs 4 percent to 80, closing the gap between second-place Charles Schwab, up 3 percent to 82.

About the ACSI

The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year. The overall ACSI score for a given quarter factors in scores from about 200 companies in 43 industries and from government agencies over the previous four quarters.

The Index is produced by the University of Michigan’s Ross School of Business in partnership with the American Society for Quality and CFI Group, and is supported in part by ForeSee Results. ACSI can be found on the web at www.theacsi.org.

This article is being republished with permission from Kearns West.

Inside Jobs, March 20, 2008

Customer Experience Domination #7

Lesson #7: Measure, Measure, Measure.

1. In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results.
2. In lesson #2, we showed you how to translate those ideas into a customer experience action plan.
3. In lesson #3, we taught you how to look for customer experience opportunities in your business.
4. In lesson #4, we showed you how to develop the customer experience business case.
5. In lesson #5, we taught you the basics of customer experience project management.
6. In lesson #6, we described some of the specific methods that you can use to improve your own customer experience.
7. In this lesson, we’ll discuss how to measure the results of your customer experience efforts.
   

In business, you get what you measure. That mantra is true for customer experience management as well; if you want to achieve customer experience domination – you need to know what to measure. In this lesson, we’ll cover some of the most common customer experience performance metrics such as customer satisfaction, advocacy, and loyalty.

These customer-centric metrics should be an important part of any business’s key performance indicators. However, for those businesses that want to dig deeper, there are additional performance metrics that you should consider. In this lesson, we’ll discuss some additional metrics and factors that you should consider to measure the effectiveness and efficiency of your customer experience process.

The ability to measure your progress and results is the single most important tool for your customer experience efforts. Discover the fundamentals of measuring your customer experience in our latest lesson.

So let's get started...

You’ve heard me rant about the strategic importance of customer experience management. Those companies that get it right will find themselves in the driver’s seat of the new economy. Those that don’t will languish.

Since I began publishing reports, podcasts, and solutions on the subject of customer experience management, I’ve seen a groundswell of interest from businesses around the globe. More and more businesses get it; winning with customer experience can yield significant results! In case you’ve missed some of my earlier rants, here’s just a short list of benefits that your business can achieve by making ecstatic customers by delivering an emotionally engaging customer experience:

• Revenue Enhancement: Satisfied customers will return more often and spend more money with your business. Simply put, happy customers will put more money in your pocket.
• Growth: Emotionally connected customers will tell others about your business, which can help your business to reach new customers and potentially new markets. Happy customers will also give you a better opportunity to try new products and services to expand you potential business offerings. In short, emotionally connected customers can ignite growth.
• Cost Reduction: Very satisfied customers continue to come back and spend their money. They don’t need much prodding – they simply love doing business with you. As a result, your business benefits by getting a greater return on your marketing dollar; less prodding and less reliance on profit-draining promotions means more contributions to your bottom line.
• Customer Retention (Churn): It's a competitive world out there. Chances are, your competition is trying to woo your customers as you read this. Truly happy customers are more likely to stay, thus reducing their potential departure from your business to your competition (aka churn). It costs a lot of money to attract customers. Keeping them happy just makes business sense.
  

With so much at stake, why doesn’t every business commit to a customer-centric business strategy? The answer is simple; most companies don’t know how to measure the attributes of the customer experience in order to make it a tangible asset. As a result, processes that can’t be effectively measured fail to gain strategic importance. Learning to measure the right metrics of your customer experience process can make all the difference.

Step 1: Know What to Measure

Let us start at the highest level. Most often companies will tend to measure the overall customer experience with a handful of overarching metrics. The most common metrics that you should become intimately familiar with include satisfaction, advocacy, and loyalty:

• Customer Satisfaction: Customer satisfaction is the degree to which your customers enjoyed their overall customer experience. This measure will often encompass the degree to which your customers were pleased by their perception of, or interaction with, your product, service, value, quality, brand, innovation, support, and overall business relationship. Customer satisfaction is the ultimate customer experience metric, but using just this one overarching metric can mask the individual attributes of the customer experience that dramatically add or detract from an outstanding customer experience.
• Customer Advocacy: Customer advocacy is the degree to which your customers are willing to recommend your business to a friend or colleague. Customer advocacy is often an indication of how willing your customers are to say something positive about your business. As with any business, there will be both supporters and detractors, but the goal should always be to push the overall advocacy scores into increasingly higher territory.
• Customer Loyalty: Customer loyalty is the degree to which your customers will continue to come back to your business on a regular basis. Customer loyalty can be difficult to measure because it can often be interpreted in multiple ways. For example, loyalty can be measured as the total duration that a customer sticks with your business. However, total duration won’t always tell you when or how often your customers may continue to shop your competition. For example, a florist may fill 50% of a customer’s annual flower orders every year. The customer’s loyalty may not be 100% since 50% of their annual floral spend is going somewhere else.
  

If you are just getting started with customer experience management, measuring customer satisfaction, advocacy, and loyalty is a great place to start. These customer-centric metrics should be an important part of any business’s key performance indicators. However, for those businesses that want to dig deeper, there are additional performance metrics that you should consider.

To fine-tune your customer experience process, you must dig deeper into each phase of your process to measure what is working well and what needs improving.

Step 2: Dig Deeper into the Key Metrics of Customer Experience

Measuring customer experience doesn't have to be as complicated as a scientific experiment on quantum physics. The trick is to develop an understanding of the key metrics at each point in the customer experience lifecycle:

Attraction: Attraction is the first phase of the customer experience lifecycle. This phase can represent the first time a prospective customer hears about your company. It can also represent the immediate recognition of a physical storefront or product as they pass by. Attraction is that first set of impressions that trigger an emotion in the customer. How do you measure your business' attraction effectiveness? Here are just a few performance metrics that you should consider:

• Impressions: Did your marketing efforts reach the intended audience? With this metric, you should measure the total number of times that your brand or ad messages were presented to prospective customers.
  
  
• Action Rate: The rate at which your prospects actually took action in response to your marketing efforts. Often, you can measure this as the ration of action to impressions. For example, a highway billboard may be seen by 10,000 people each day and yields 100 walk-in customers, representing an action rate of 1%. In the on-line world, this metric is often called the click-through-rate (CTR).
• Conversion Rate: The rate ate which your prospects actually reached a desired goal in your sales process. This may be conversion to a lead, or ultimately conversion to a sale.

Interaction: The interaction phase is you and your customers 'time in the box' together. This is the time when the customer browses your products & services, asks questions, selects products, and checks out. It is your best opportunity to make a great impression. Here are a few performance metrics that you should consider:

• Transaction Amount: This metric is the measure of how much revenue that you realized from each customer.
• Transaction Frequency: The rate at which customers bought from you over a given time period. A coffee shop, for example, would strive to see their customers visit them daily.
• Transaction Efficiency: The overall efficiency of the transaction process as measured in process steps, touch points, and overall duration. In simple terms, this is the measure of how easy it is to do business with you.
  

Cultivation: The cultivation phase is time after your customers experience you and your business. It is the time that they reflect on their experience, tell their friends and family about it, and hopefully, come back again and again. Here are a few performance metrics that you should consider:

• Service Rate: The rate at which your entire customer base utilized your customer service capabilities during a given time frame. For example, if 1 out of every 100 customers contacted customer service, your service rate would be 1%. An increasing service rate would indicate that there is some issue with your customer experience process.
• Resolution Closure Rate: The rate at which any customer question, inquiry, or problem is resolved. For example, if 8 out of every 10 new customer service calls is resolved immediately, the closure rate would be 80%.
• Resolution Efficiency: A measure of the overall efficiency of the problem resolution process. The efficiency rate can be measured in terms of steps, touch points, and duration. For example, a customer question that is answered immediately online is very efficient, whereas, a customer issue that requires multiple phone calls, emails, or service calls would receive a low efficiency rating.
  

Step 3: Look at the Big Picture

So far, we’ve discussed the overall customer experience metrics to consider, as well as additional metrics to measure customer attraction, interaction, and cultivation performance attributes. To get a complete picture of your customer experience landscape, you should also consider digging deeper into your customer’s background, needs, and individual behaviors:

• Customers (who): Dig into your customer base by developing a better understanding of their basic demographic and socio-economic attributes. Not all segments of your customer population may react to your customer experience in the same way. For example, a mother visiting your business with kids in tow will have a different experience than your working professional.
• Wants and Needs (why): Develop a deeper understanding of why your customer came to your business in the first place. For businesses with a broad product or service offering, each individual customer want or need can vary widely. For example, each customer visiting a hardware store may have a unique want or need.
• Channels (where): If your business operates in multiple markets or channels, make sure that you establish metrics to measure how well your customer experience performs across multiple locations or channels. For example, your customer experience may be very different from one location to the next.
• Behaviors (how): Each customer may navigate your touch points in a different manner. Make sure that you establish a mechanism for measuring how well your customer experience rates given different customer scenarios.
  

Now that we’ve discussed a variety of customer experience metrics that you should consider for your business, it’s time to put them to work. In order to be able to measure your progress, we recommend that you benchmark your performance metrics before you begin your customer experience project. This will provide you with a baseline from which you can show improvement.

Once you implement any new customer experience processes or capabilities, you should re-measure and compare the results to the original benchmarks. Make this a habit. The practice of continually measuring where you are and where you’ve been will instill the every-important desire for continual improvement.

There is an old saying in business that you get what you measure. I’ve found this saying to hold true in nearly every instance. If you want customer experience improvement; measure it. If you want to find out where your current process is breaking down, measure it. If you want to achieve customer experience domination, measure it!

That wraps up Lesson #7. To recap our lesson, the three steps that we covered included:

1. Know What to Measure
2. Dig Deeper into the Key Metrics of Customer Experience
3. Look at the Big Picture
   

Congratulations, you’ve now completed our 7 Steps to Customer Experience Domination!

In our 7 Steps to Customer Experience Domination, we covered a lot of ground. We walked through the steps that are necessary to develop a compelling customer experiences strategy. We showed you how to translate those ideas into an action plan and we taught you how to look for customer experience opportunities in your business. We discussed some of the methods for improving your own customer experience capabilities and we’ve taught you about the key metrics from measuring the results of your customer experience efforts.

If you followed each step carefully, then you and your business are well on your way to customer experience domination in your respective industry or market.

If you’ve had success by following our program, we’d love to hear about it!

You can get more ideas, methods, and advice to support your customer experience improvement efforts in our Customer Experience Solution Kit. In our comprehensive solution kit, we provide you with everything you need to get started with your customer experience project. The Customer Experience Solution Kit can help you to:

• Identify key customer experience strategies
• Establish a foundation for your customer experience process
• Identify key touch points
• Diagnose overall customer experience capabilities
• Identify key improvement projects
• Determine project scope and approach
• Plan your customer experience project
• Develop a customer experience business case
• Manage your customer experience improvement project
• Establish a methodology for customer experience management

Learn more about our comprehensive Customer Experience Solution Kit now!

Inside Jobs, March 12, 2008

Customer Experience Domination #6

Lesson #6: Improve Your Customer Experience

1. In lesson #1, we discussed the steps that are necessary to develop a compelling customer experience strategy that can deliver meaningful and lasting results.
2. In lesson #2, we showed you how to translate those ideas into a customer experience action plan.
3. In lesson #3, we taught you how to look for customer experience opportunities in your business.
4. In lesson #4, we showed you how to develop the customer experience business case.
5. In lesson #5, we taught you the basics of customer experience project management.
6. In this lesson, we’ll describe some of the specific methods that you can use to improve your own customer experience.

Customer experience management can mean different things to different businesses. How you achieve customer experience domination will likely be different than your peers or competitors. Ultimately, you will have to decide the right strategy and methods that fits your business. In this lesson, we’ll describe some of the specific methods that you can use to achieve customer experience domination.

We discuss dozens of customer experience tips and strategies in our Customer Experience Solution Kit. However, for the purposes of this lesson, we will discuss four critical steps that can help you to achieve customer experience domination for your business.

Step 1: Create and Reinforce Your Unique Value Proposition

In today’s economy, there seems to be an oversupply of everything. Regardless of your industry or marketplace, you will undoubtedly face multiple competitors that are offering a similar product or service. Within a few miles of the ClearBrick offices, for example, there are at least 4 coffee shops, 4 convenience stores, two grocery stores, and three elementary schools. Needless to say, we have a lot of options when shopping for any of these products or services. In this environment of ultra competition, being average just won’t cut it. You need to be able to clearly stand out from the crowd.

Improving your customer experience should begin by identifying your unique value proposition; a position in the marketplace that can make you the obvious choice when the customer is seeking your product or service.

“Your customer experience should reinforce
your unique value proposition.”

Don’t let yourself get lulled into a false sense of confidence. Many companies may poll their customers and find that overall customer satisfaction is good. The problem, however, is the next time that customer is in the market for your product or service, ‘good’ may not be good enough to keep them from shopping your competitors. Customers may have a positive image of your business, but if your customer experience isn’t clearly better, the competition stands a good chance of stealing them from you sooner or later.

That’s why it’s important to clearly identify the value proposition that makes you unique. Let me give you a simple example. As consumers, we are all very concerned about the ever-increasing price of gasoline. In the area where I work and live, there are at least 4 convenience stores that I could visit to get gas for my car. One store, however, has a unique value proposition that stands out from the rest; they always have the best price. After visiting many of the other stations, I’ve found their stores to be clean and the service to be impeccable. But in a crowded market, a ‘me-too’ approach just isn’t good enough. One convenience store has established themselves as clearly different by establishing a reputation as the price leader in the market, something that has benefited them well; the pumps always seem to be two-cars deep!

I would add, however, that competing on price alone can be a tenuous strategy. The next competitor that makes a better offer will often steal customers away. To keep your customers loyal, it is also important to establish an emotional connection with your customer that is meaningful and long lasting. A strong emotional connection will often result in higher loyalty – even when there are lower-cost alternatives in the market.

“If your value proposition doesn’t clearly explain why you are better than the competition, you have work to do.”

For your business, make sure that you define a value proposition that is clear and unique in your marketplace. This is the time to use words that define the extremes: ‘best’, ‘fastest’, ‘cheapest’, ‘highest quality’, or ‘the-one-and-only’. This is not time to be shy or introverted. Your business should establish a clear and differentiated position in the marketplace and in the consumer’s mind. Your customer experience should then reinforce that value proposition at every step of the customer experience process.

Step 2: Re-engineer the Customer Experience Process

Take a process-centric approach to improving your customer experience. As we covered in earlier lessons, customer experience is a process and it is critical that you take an end-to-end perspective when undertaking any customer experience improvement effort.

By taking a process-centric approach, you will be able to model, simulate, optimize, and measure the performance of your process. You will also be able to take advantage of proven process re-engineering methods to diagnose, refine, and optimize the process for efficiency and effectiveness.

Here are some examples of how you can improve your customer experience process:

1. Model and Simulate the Customer Experience Process: There are two approaches that you should consider for your customer experience re-engineering effort. The first approach entails ‘Clean-Sheet’ re-engineering. This approach implies that you design an entirely new process from the ground up. This approach is the equivalent of starting your process design with a blank sheet of paper.
   
   The second approach involves developing a deep understanding of the current process to understand key issues. Any re-engineering efforts are then focused on those areas could benefit from re-engineering.
   
   Regardless of which approach you take, you will learn a tremendous amount about your customer experience by simply modeling the process from beginning to end. By doing so, you will be able to identify the potential bottlenecks, conflicts, or disconnects that may occur. Knowing where your potential problems lie is an important first step towards improving your customer experience process. For example, a hospital may take basic customer information at a registration desk (touch point) and then take basic vital signs at another station. This process can be re-engineered so that the steps can be combined (by taking some vital signs at check-in) which streamlines the overall customer experience process.
   
   
2. Simplify or Optimize Touch Points: Your customer experience process will undoubtedly be comprised of multiple discrete touch points along the way. While process re-engineering may focus on the flow or hand-offs between touch points, don’t forget to re-evaluate each touch point. For example, a tire repair shop learns that they are losing customers because they don’t clearly list prices or service packages on their web site. By identifying and resolving this deficiency, they could realize immediate results. In short, optimizing or refining the attributes of certain touch points can have dramatic results.
   
   
3. Scenario Management Optimization: While there may be a baseline customer experience process for your business, don’t forget to optimize the process for different customer scenarios that may occur. Once you have a baseline customer experience process defined, it can be helpful to conduct a ‘what-if’ analysis to determine what might happen given different customer scenarios or circumstances. What happens if the customer has to leave in the middle of checking out online? How should you respond if a customer has a unique product customization request? What should your employees do if the customer returns a product? Thinking through these scenarios will make you and your company better prepared for the unique situations that inevitably arise in nearly every customer experience situation.
   
   
4. Eliminate Handoffs: Perhaps the biggest issue facing any customer experience is the dreaded hand-off. Typically, a discrete individual, team, or system performs each touch point. At some point, the customer and their information must be handed-off to the next touch point in the process. Sometimes, this is where customer experience breakdowns occur. For example, a home improvement store may provide a price quote to a customer for new carpeting. But when the customer never returns – the handoff to the ordering and purchasing process has obviously broken down. Think about how to eliminate these handoffs, or establish controls to ensure that the handoffs occur without issue on a consistent basis.
   
   
5. Integrate Channels: In today’s business world, every business must operate across multiple channels in a seamless manner. Often, businesses treat each channel as a discrete entity that can cause problems when customers try to switch channels. For example, a customer may be browsing your web site when they pick up the phone and call the customer service center or drop by your brick-and-mortar store. Make sure that you have optimized your customer experience process to work seamlessly and consistently across your various channels.
   
   
6. Manage the Customer Experience as your Top End-to-End Process: No business process should be left alone to run itself. Customer experience is no different. In order to achieve customer experience domination, you must manage the customer experience as your most important end-to-end process. By defining the customer experience as a core end-to-end process, the customer experience process can be studied, measured, monitored, refined, reengineered, optimized, and improved. By doing so, the customer experience process will become much more disciplined and receive the attention it deserves in your organization.
   

Step 3: Fix your product or service

Your sales representatives always smile. Your account executives are professional and knowledgeable. Your cashiers, tellers, doctors, nurses or consultants are polite and professional. Despite excelling at the basics of good customer service, your customer experience can still fall flat if your product or service doesn’t deliver as promised. On your quest for customer experience domination, don’t overlook your product or service.

Customers are often lured to your company by provocative ad campaigns or word-of-mouth referrals. Their interaction with your employees can be extremely positive. But after the party, the real customer experience test begins; did the product or service deliver on its promise?

• If you sell automobiles with an extended warranty, make sure that your customer experience process will take care of any problems quickly and efficiently.
• If you are a hospital that promises a personal touch, make sure that your customer experience process reinforces that promise by providing a deep level of caring and compassion.
• If you are a consulting firm that promises experienced professionals, make sure that your consulting engagements incorporate best practices or lessons learned throughout the process.
• If you are a home improvement contractor that prides itself on quality workmanship, make sure that your finished product is always perfect.
• If you are a restaurant that prides itself on great food, make sure that you always deliver your food hot and fresh.

When you are improving your customer experience, it can be extremely helpful and insightful to step back and review the product or service that you are providing. This is a time to be brutally honest; does your product or service really live up to the hype? If there is reason for concern, this is the time to take steps to fix your product or service. After all, the finished product or service often creates a lasting impression that extends well beyond the initial customer experience process.

Get it right, and you are well on your way to customer experience domination.

Step 4: Cultivate Your Relationships

Too often businesses will spend a lot of time and effort to acquire a customer, but then ignore them completely once the transaction is complete. Businesses that understand the power of customer cultivation, however, can reap real rewards by keeping their customers coming back from more.

It’s simple math really. The cost of acquiring new customers is often the most costly activity for any business. Let’s say a dentist office spends $10,000 on a new advertising campaign that yields only 100 new customers. That equates to an acquisition cost of $1,000 per customer. Obviously, the office will need to generate at least $1,000 per customer to turn a profit. Let’s say that each visit yields $500 in revenue for this dental practice. It is obviously of paramount importance to keep those customers coming back. At two visits, the dentist breaks even. Any visits beyond that can mean real profit for the practice since no further acquisition costs are required. Simply put, customer cultivation pays.

Unfortunately, not enough businesses practice customer cultivation. I’ve worked with numerous businesses over the years that have never followed up with me after the work is complete or the product was sold. Even though I may have additional wants and needs, I hear nothing from them – leaving me with the impression that they don’t care. As a result, I may shop elsewhere the next time I need that product or service.

Improve your customer experience by adding or enhancing how you cultivate your customer relationships after acquisition. Doing so can mean real results for your business.

You can get more tips and advice on how to improve your customer cultivation capabilities in our strategy booklet titled ‘Cultivate What You Sow.’

That wraps up Lesson #6. You are now one step closer to customer experience domination. To recap our lesson, the three steps that we covered included:

1. Create and Reinforce your unique value proposition
2. Re-Engineer Your Customer Experience Process
3. Fix Your Product or Service
4. Cultivate Your Relationships

Stay tuned for Lesson #7, where we’ll discuss how to measure your results.

Inside Jobs, March 6, 2008

Customer Experience Domination #5

Lesson #5: Managing Your Customer Experience Project

• 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 a customer experience action plan.
• In lesson #3, we taught you how to look for customer experience opportunities in your business.
• In lesson #4, we showed you how to develop the customer experience business case.
• In this lesson, we’ll teach you the basics of customer experience project management.

As a business professional, you know that getting results requires vision, discipline, and paying attention to details. Improving your customer experience is no different. Realizing the significant benefits associated with customer experience domination requires sound project management fundamentals.

Project management may not be sexy, exciting, or inspirational, but it is a discipline that when executed effectively can make all the difference between success and failure. I’ve seen far too many companies throw millions of dollars down the drain due to the lack of project management discipline. Customer experience projects are no different; to get the results you desire you will need to master the fundamentals of project management.

In this lesson, I will share with you the basic elements of project management discipline. Incorporate these elements into your customer experience project and you will be well on your way to achieving customer experience domination.

Step 1: Create the Project Workplan

The key management tool for any project is the project workplan. The workplan is a comprehensive plan that identifies the activities that will be conducted over the course of the project and identifies the sequence, timing, interdependencies, and individuals responsible for each activity or task. The workplan should represent the scope of work to be conducted as part of the project.

A common tool for defining, modeling and managing the project workplan is the Gantt chart, which is a graphical representation of the tasks, interdependencies, responsible parties, and progress over time. Additional methods include the PERT chart (Program Evolution Review Technique) and the Critical Path Method (CPM), both of which depict the tasks and interdependencies as a network model.

There are numerous commercially available workplan tools that support the various planning methods. We recommend using one of the available tools to create and manage your project workplan. Perhaps the mostly widely used workplan tool is Microsoft Project. However, an initial project workplan can also be created using simple spreadsheet or flowcharting tools, although they will not provide the built-in project reporting and analysis capabilities that come with most tools.

Get started on your workplan by creating a work breakdown structure (WBS) for your project. The work breakdown structure represents a hierarchical structure for the phases, steps, activities and tasks that make up the project. If you’d like more information on project management techniques, you can get additional resources at the Project Management Institute.

How to Avoid the Top 5 Customer Experience Project Pitfalls

Customer Experience differentiation can generate significant benefits for any company. Unfortunately, many companies fall victim to a common set of customer experience pitfalls and fail to capitalize on their customer experience potential. Successful companies overcome these project pitfalls and are far more likely to realize meaningful and lasting results from their customer experience projects. In our report, 'How to Overcome the Top 5 Customer Experience Project Pifalls', we've assembled the top 5 mistakes that companies make when taking on a customer experience project. We clearly explain each potential pitfall and provide pragmatic advice that will help you to overcome these customer experience project pitfalls. Get your copy today and take a step closer to customer experience domination

Once you define the basic phases, steps, and activities of your workplan, you will need to estimate how long each element will take to complete. Estimating an appropriate timeline for your project can be the most vexing part of the process; despite the best intentions and a heavy dose of scientific forecasting, it seems that often the intangibles will ultimately dictate the project timeline. As a result, it’s often best to define the timeline as a range, rather than an absolute number of weeks or months.

There are numerous methods for trying to evaluate how long you should expect your project to take. A top-down estimation makes an ‘educated guess’ as to how long the project should take. The underlying steps, activities, and tasks are then scheduled to fit into the timeline. If the activities won’t fit the timeline either the scope or timeline is modified and the process is repeated. This forecast accuracy of this method can be poor, but the ability to quickly generate a high-level timeline estimate makes it a good method for preliminary planning.

A bottom-up estimation looks at the individual underlying tasks, resources and interdependencies that, when taken together, add-up to the total estimated project duration. The bottoms-up method requires that the vast majority of project attributes are well defined and understood. Developing the bottoms up method can be tedious and often results in a timeline estimate that far exceeds original estimates. This method, however, results in a more detailed and fact based forecast that is more accurate than the top-down method. However, developing the bottom-up model can be time consuming and difficult.

Both methods have their flaws. In fact, some professional project managers have adopted an informal rule to double any original project timeline estimate to account for the various intangible factors that inevitably affect any project. Needless to say, take your timeline estimate for what it is – an estimate.

In any case, your own project scope, approach and team culture will determine the timeline that is right for you. As a general rule you should try to avoid estimating a project timeline longer than 12 months in duration. Projects that span longer than a year are prone to changes in scope, goals, requirements, personnel, and funding. In short, the longer your project horizon, the less likely it is that you will realize your original project goals and objects.

A preferred approach is to break your overall project into digestible phases that can be completed within three to six months. By doing so, you will have interim project successes and realize potential benefits along the way, if appropriate. Each subsequent phase can then be defined with the most current information. As a result, project phases are more likely to be completed on time and on budget, which makes everyone happy.

Step 2: Plan for Change

Improving your customer experience capabilities will undoubtedly require a fair amount of things to change in your company: responsibility changes, process changes, technology changes, and behavioral changes. Getting there won’t happen by accident. It also won’t happen if you wait until after your project is nearly complete to try and force the new capabilities onto your unknowing, and potentially unwilling, employees. That’s where change leadership comes into play.

Change Leadership is a discipline that focuses on managing the impacts that new business capabilities may have on your organization, and doing it in a manner to ensure that the change takes place in an orderly, yet effective, fashion. We use the term ‘change leadership’ rather than ‘change management’ because effective change occurs when someone is leading, not pushing. Leading means getting people to buy-in to the new concept, it means making it personal for each individual, and it means motivating and/or creating incentives for people to adopt the new capabilities or roles.

Change leadership is not about buying t-shirts or coffee mugs with the project name on them. Change leadership is a combination of effective communications, education & training, and organizational alignment. Before you start your project, make sure that you have a comprehensive plan to address each of these important aspects of change leadership:

1. Assess Change Readiness. Conduct an assessment of your company’s culture and appetite for change. Typically, an organization’s change readiness can be assessed through a formal survey that measures the pace of historical change, the stakeholder’s willingness of change, and the rate of adoption of change. These factors are then evaluated to determine the overall complexity of the change management effort and provide an important input into the communication, training, and organizational alignment planning efforts.
2. Develop a Communication Plan: Develop a communication plan that will identify the method, style and timing of how you will communicate key project messages and accomplishments. This will include identifying the different audiences and potentially different communication plans for each audience. For example, how and when you communicate to your employees will be different than how you communicate to your executive sponsors.
3. Develop a Training Plan: Develop an initial plan up-front for how you will formally train and support your employees. This may include a combination of classroom, hands-on, and self-service models depending on the nature of change you are planning.
4. Develop an Organizational Alignment Plan: Develop a plan to make sure that your entire organization is aligned with the project. That includes the top executives and executive sponsors, as well as the individuals on the project team.
   

Step 3: Assemble the Project Team

It seems that you can’t pick up a business book today without finding a common piece of advice: Get good people. Assembling the right people for your project team should follow that sage advice. Getting the right people will improve your project’s efficiency, effectiveness, and overall chances for success.

But before you can assemble your team, you should define the team structure, roles, and responsibilities that will be required for your project. These elements will help to guide you in finding the right person for the right role on your project team.

Project team structures can come in just about any shape or size. The trick is to create a structure that will work most effectively for your company and project.

The roles and associated responsibilities for your project team should be well defined and understood. Although not every role will be required for every project, consider each one carefully to determine how well it fits your situation. We’ve provided a few of the more critical roles & responsibilities to help you to get started:

• Steering Committee: The role of the steering committee is to provide guidance and advice to the project and serve as a conduit for communicating project status to executive stakeholders. Effective steering committees are actively, not passively, involved in the project and often take on the ultimate responsibility of the project’s funding, scope, and results. The steering committee should be comprised of individuals with the authority and responsibility to make critical decisions for the project. Its members should be cross-functional in nature that includes the executive sponsor, subject matter experts (customer relationship management, customer service, account management), functional representatives (finance, operations, human resources, marketing, information technology, research & development), and stakeholder representatives (customer liaisons, field personnel, vendors, employees).
• Executive Sponsor: The role of the executive sponsor is to serve as the primary individual that is responsible for the project’s outcome. This individual should have enough authority in the company to help resolve key issues and influence key stakeholders. The executive sponsor is responsible for organizing and leading the steering committee meetings.
• Stakeholders: The role of the stakeholders is to effectively represent the interests and insights of their respective area of responsibility. Stakeholders should represent the area of the business that is affected by the project. For example, a call center consolidation project should include stakeholders that represent the customer service agents that will be affected. The stakeholders should be involved throughout the project to take them on the journey rather than simply surprising them with the final solution at the end of the project.
• Project Manager: The role of the project manager is to provide the day-to-day direction and management of the project. This includes the day-to-day coordination and collaboration with the project team, as well as the status reporting and communication that is required to keep the steering committee, executive sponsor, and advisors up to date with the project. The project manager is responsible for establishing and managing the project management governance including risk, issue, workplan, team, and business case management procedures.
  

You can get a comprehensive list of customer experience project roles & responsibilities in our Customer Experience Field Guide titled ‘How to Make your Customers Sing!’

As you create your project team structure and begin to assign individuals to specific roles, there are several factors that you should consider:

• Full time versus part time: Consider whether each role requires full or part time participation. In most cases, full time participation is preferred. If full time participation is not feasible or possible, make sure that you plan for the potential productivity drain that may result of only part time participation. Some project managers use a rule of 50% for part time resources; plan for part time resource to be productive for only half of their participation rate. For example, a resource that participates only 60% of their time realizes 30% productivity over the course of the project.
• Cross-functional representation: If your project will affect multiple functions and/or stakeholders in your company, make sure that your project team reflects the cross-functional nature of the project.
• Double-Hatting: In some cases, a single individual may be able to take responsibility for multiple roles. This practice is called double-hatting; an individual wears a different ‘hat’ for each role they are filling. For example, one individual may serve in the role of both training and communication specialist.
• Authority: As you assemble your project team, make sure that the collective team possesses the appropriate level of authority to resolve issues and make important project decisions. A project team without the appropriate authority often gets bogged down while waiting for key decisions to be made by outside parties.
• Co-location: If your project team members come from multiple locations or departments, it is important to create a single, common project team environment where they can work together. Despite advances in e-mail, messaging, and audio and video conferencing, the value of having your team co-located in the same room can be significant; issues are identified and resolved more quickly, project communication is more effective, and key design considerations can be discussed, debated, and resolved more efficiently.
• Collaborate with Vendors: If your project team consists of external consultants or contractors, make sure that you develop a healthy relationship with them. Make sure that their goals and incentives are aligned with the project and that they blend seamlessly into the project team environment. Avoid the ‘us’ versus ‘them’ mindset that can creep into a mixed team environment; a situation that can breed mistrust and other bad behaviors.
• Time Keeping: Keeping track of what each project team member is working on requires an effective time keeping mechanism. In an environment where project hours count against the project budget, effective timekeeping is critical. Establish your project’s clear time keeping policies and procedures up front.
  

Step 4: Assemble the Project Management Plan

Effective project management requires a lot of discipline to track activities, manage budget expenditures, resolve issues, mitigate risks, and keep everyone informed and happy. But don’t let the tools manage you.

Too often, project managers get inundated with the administrative aspects of project management to the point that the project goals get lost in the flurry of paperwork. Don’t over administer. Instead, find a balance that maintains enough discipline for your situation while letting the project team to move forward with the task at hand – delivering the project.

The most effective project managers find a way to balance the administrative nature of project management with the creative energy that is generated by the project team. That balance can be achieved by following some project management best practices:

1. Make the Destination Clear: The destination for any project should be clearly defined, measurable, and easily understood. At project inception, clearly define the factors that prompted you to take the journey, the tangible results you seek to achieve and how you will measure them, and the course and methods that you plan to use to get you there.
2. Be Persistent: Stay focused on the destination and eliminate any unnecessary distractions by being relentless on achieving the project goals, measuring progress against key performance indicators, and resolving issues quickly.
3. Have a Plan: Winging it rarely works – so have a work plan. A work plan is a detailed representation of the overall project approach and should be defined with enough detail to provide any team member with a clear understanding of the project, where things stand, and who’s doing what.
4. Assemble a Great Team: The value of having great people around you in business has been a proven success factor. Assemble a great team of people for your project, get them committed to the project, and empower the team to collaborate to achieve dramatic results.
5. Measure Progress & Results: You get what you measure. So make sure that you measure the important attributes of your project such as cost and benefits, status, and quality.
6. Kill Issues Dead: Project issues can be a pesky thing. Make sure that you have a mechanism in place to identify and resolve issues quickly and completely.
7. Manage the Change: Change won’t happen by itself. Have a plan and pay close attention to who, how and when change will occur.
   

Take these tips into consideration as you assemble the major project management deliverables into a comprehensive Project Management Plan. The Project Management Plan (PMP) will serve as the master plan for your customer experience project.

Step 5: Kick Off Your Project

You are now ready to start your project. In order to do so, you need to make sure that you have your entire team on board with where you are going (goal), how you are going to get there (approach), and why you’re doing it (business case).

Start by having a project kick-off meeting to communicate and discuss all aspects of the projects with all project stakeholders: Executive sponsors, project team members, contractors, vendors, employees, and customers, as appropriate.

The project kick-off not only serves as an important management meeting to mobilize the troops, it also can serve as the initial change leadership communication to set expectations for the journey. Although the project is just beginning, the kick-off meeting can be a critical event that sets the stage and demonstrates management’s commitment to the effort. It’s a time to rally the team, generate excitement, and answer any questions:

1. Paint the Big Picture: When you kick-off your project, you need to provide an overview of what you are trying to accomplish and how you are going to get there. The Customer Experience 'Made Clear' Process Maps are excellent tools for helping get everyone to understand the business issues being addressed and to explain the expected outcome. The Customer Experience Roadmap serves as a visual representation of the project approach including the sequence and timing of when certain activities will occur. Both documents should be used during the project kick-off, and displayed as a reminder throughout the project of what you are trying to accomplish and how you are going to get there.
2. Get Dirty: The kick-off meeting should also be about getting into the details. Discuss the specific elements of the project work plan, business case, and status reporting processes. The kick-off meeting should provide the appropriate details to make everyone comfortable with how the project will be managed going forward.
3. Create Excitement: Perhaps most importantly, create some excitement. In many cases, the project team is taking on additional responsibilities over and above their day-to-day jobs. So make it worth their while. Generate an excitement and make sure that everyone is on board. If appropriate, establish team or individual incentives for participating and completing the project so people can translate what’s in it for them.
   

That wraps up Lesson #5. You are now one step closer to customer experience domination. To recap our lesson, the three steps that we covered included:

1. Create the Project Workplan
2. Plan for Change
3. Assemble the Project Team
4. Assemble the Project Management Plan
5. Kick Off Your Project

Stay tuned for Lesson #6, where we’ll discuss specific examples of how to improve your customer experience.