Inside Jobs, August 29, 2008

Myth #4: A Centralized Customer Database Provides a 360-degree View of the Customer

Establishing a 360-degree view of the customer has long been the holy grail of any CRM program. Many companies consolidate their multiple customer databases into a centralized customer database and declare victory. Although establishing a single customer database is foundational to a 360-degree view of the customer, a customer database alone often won’t provide your company with a complete view of the customer. Here’s why:

1. A centralized customer database often contains only basic or static data including name, address, account number, demographic and profile information. Although this core information is critical, it often won’t provide historical information regarding transactions or changes to address, account, or profile information. Without historical information, it’s difficult to get a complete picture of the customer.
2. Customer interactions can take place in many forms, at multiple locations, and across multiple channels. Unless the customer database is specifically designed to store interactions, you’ll be missing an important element of your customer’s behaviors.
3. Customer databases are often designed to support operational activities such as transaction processing, order management, and billing. Operational databases often lack robust customer analytics that are necessary to unlock the secrets of the customer experience.
4. Customer feedback is often collected and managed separately from customer information. As a result, correlating customer sentiment to specific customers or customer segments can be difficult.

Although a centralized customer database is foundational to a 360-degree view of the customer, a database alone won’t provide the complete picture. Companies that are seeking to establish or improve their total customer experience should look beyond customer databases to more robust data warehousing capabilities that include a view of historical changes, transactions, interactions, and feedback that can provide a complete 360-degree view of the customer.

Myth #3: Each Channel Should Have a Unique Customer Experience

Thanks to technology and multiple points of presence, business just keeps getting more complex. Innovations in technology have brought new channels such as the call center, Internet, and now mobile channels in many industries. Many businesses, anxious to stay in the game, jump in with new channel offerings without an integrated view of the customer.

Granted, each channel has unique characteristics and can be used in different ways and for different purposes by the customer. Treating each channel experience as unique and independent, however, is a recipe for disaster. Each channel may indeed be different; the customer experience shouldn’t be.

Ever since the day that Ray Kroc began expanding the McDonald’s empire, he set the standard for consistency across each and every location. No matter where you are in the world, the McDonald’s experience is the same. Ray Kroc’s formula for consistency should be a blueprint for any business operating in a multi-channel environment today. Managing each channel as unique and different shouldn’t be. Here’s why:

1. Customers are increasingly expecting multiple channel options. According to a Sterling Commerce Study, 80% of customers surveyed feel it is important to have a choice of shopping across multiple channels when choosing a retailer. Businesses with only a single channel option, or channels which are discrete and disconnected, will likely miss the boat.
2. Customers expect the customer experience to be the same across channels. According to a survey conducted by Tealeaf, 85% of adults expect their online service levels to be the same as offline, an increase of 3% from the prior year. Providing inconsistency across channels will only contribute to customer frustration or confusion.
3. Customers will likely switch channels. As the number of channels available to the customer continues to grow, so too does the challenge of providing seamless cross-channel integration. A customer experience that begins in one channel should transfer seamlessly and be continued in another without interruption. Lack of consistency across channels will only detract from the overall customer experience.

While each business channel has unique characteristics and can be used in different ways and for different purposes by the customer, each channel experience should not be designed or managed independently. Companies that are seeking to establish or improve their total customer experience should focus on cross-channel consistency and seamless channel handoffs regardless of the customer experience scenario. Simply put, maintaining discrete channels with separate customer experiences won’t cut it for today’s demanding customers.

Myth #2: Customer Experience Is Just A New Term For Customer Service

Make no mistake, customer service is as important as ever; delivering great customer service is one of the most tangible and visible methods for improving customer satisfaction. Customer service, however, represents only a small fraction of the overall customer experience. Companies that talk themselves into a false sense of accomplishment by focusing only on customer service are missing the bigger picture; customer experience encompasses much more that just customer service.

While customer service is important, focusing solely on customer service misses the mark on the bigger picture. Here’s why:

1. Customer service often represents only a subset of potential touch points: a receptionist, a call center representative, or a restaurant waiter or waitress. Each touch point does provide a significant contribution to how each customer is treated. Even the best customer service, however, won't rectify an otherwise flawed customer experience. In contrast, the customer experience is broad, encompassing all customer service touch points that can extend from the customer's first impression to their ultimate defection.
2. Customer service often refers to human interaction with the customer. While human interaction is critical, consumers are increasingly utilizing self-service alternatives via the internet, telephone response, and kiosk. According to a study by Pew Internet Study, 73% of adult Americans use the internet, a number that continues to grow steadily. Customer experience initiatives must consider all touch points and channels in order to grasp the end-to-end scope of the customer experience process.

While customer service is an important component of the overall customer experience, companies that are looking to establish or improve their customer experience capabilities should define their customer experience more broadly; the customer experience should be defined as an end-to-end process that begins with customer attraction, flows through interaction, and ends with cultivation – where the process starts over.

5 Customer Experience Management Myths

As customer experience management (CEM) continues to gain importance in the minds of today’s CEO’s, more and more companies are taking on customer experience management projects to improve customer satisfaction, develop better customer insights, nurture customer loyalty and advocacy, and improve customer lifetime value. The rapid rise to the top echelons of strategic priority has brought an unfortunate side affect; numerous customer experience management myths have begun to form due to a flood of conflicting definitions, perspectives and over-hyped promises.

For any company seeking to establish or improve its customer experience management capabilities, it’s important to dispel these myths once and for all.

Myth #1: Net Promoter Score (NPS) is the only metric you need

The customer experience can be broad, long running, it can span channels, and is influenced by any combination of internal and external factors. Attempting to measure it effectively with a single metric such as customer satisfaction or net promoter score is overly simplistic and risky. Effectively managing the customer experience requires effective measurement and management of a portfolio of metrics that will provide a true measure of what is – or is not - working.

The Net Promoter Score (NPS) is a measure of customer advocacy that was the centerpiece of Fred Reichheld’s 2006 book titled ‘The Ultimate Question.’ The net promoter score is calculated by taking the percent of customers who are promoters less the percent of customer who are detractors. Obviously, the higher the resulting number - the better.

While the net promoter score is an effective measure of overall customer advocacy, it will not address all of your potential customer experience management questions. Here’s why:

1. Customer advocacy – or net promoter score - measures only one dimension of the customer experience. Focusing only on a single metric such as net promoter score means ignoring equally important dimensions such as customer satisfaction and customer loyalty. An effective and comprehensive customer experience program must take all of these dimensions into consideration.
2. The net promoter score is only an aggregated measure of the total customer experience. However, the number of factors and touch points that contribute to the overall customer experience can be numerous. Focusing only on an aggregate metric without understanding or managing the contributing factors can yield unpredictable results. Companies seeking to improve their overall customer experience must focus on managing and measuring the underlying events that contribute to an exceptional customer experience.
3. The net promoter score does not necessarily equate to customer action. For example, for every customer that says they would ‘definitely recommend’ the company in a customer survey may not make any actual recommendations. Companies seeking to realize tangible results will need to correlate their NPS ratings with other key business metrics such as new customer additions, increase in profitability, or changes in market share.

While NPS is an important customer experience metric, companies that are looking to establish or improve their customer experience capabilities will need to identify a more robust set of metrics that will measure all dimensions of the customer experience life cycle.

The other myths:

Myth #2 Customer Experience is Just A New Term for Customer Service

Myth #3 Each Channel Should Have a Unique Customer Experience

Myth #4 A Centralized Customer Database Provides a 360-degree View of the Customer

Myth #5 CRM Software = Customer Experience Solution

Inside Jobs, August 20, 2008

Inside Jobs, August 8, 2008

Customer Centricity: A Case Study

While many companies continue to follow the product centric ‘Make it and they will come’ philosophy, other companies have turned the corner on customer centric business practices. One company that seems to get the concept of customer centricity is Progressive Insurance. A sampling of their recent television ads demonstrates how Progressive.com is standing out in the historically stodgy insurance industry.

Now I’ll admit, I’ve never been a fan of the insurance industry; I harbor anxieties that are perhaps common among insurance customers:

1. I fear that although I have insurance, I won’t be compensated for potential losses. “I’m sorry sir, but your policy doesn’t cover locust attacks.”
2. I fear that I’m paying too much for my insurance, because I don’t continually monitor competing rates. “Why yes sir, your insurance rates have gone up each year even though you’ve never filed a claim.”
3. I fear that if I ever need to file a claim that it will be an extremely painful process – which could take months or years to bring to closure. “Thanks for calling. We are experiencing extremely high call volumes. Please hold, you are currently 3,423 in line…”

Progressive.com’s customer-centric approach focuses on addressing these typical customer anxieties front and center. They focus on saving their customers money and providing outstanding customer service. Their marketing approach is an excellent example of how companies are turning the corner on customer centric business strategies.

Progressive’s recent marketing efforts offers several lessons for companies that are seeking to turn the corner with their customer centric business strategies:

Customer-Centric Lesson #1: Be clear about your brand promise.

Everything that Progressive does in the marketplace reinforces their brand promise of customer centricity. Even the company tag line clearly states their focus on the customer: “It’s about you. And it’s about time.®”
Specifically, Progressive’s brand promise is to deliver more value and better customer service than its competitors and is demonstrated in one of their latest television ads:



Customer-Centric Lesson #2: Address your customer’s biggest concerns.

Getting insurance won’t make anyone cool, sexy, or popular, but it will bail you out if – or when – you need it. Without question, the number one concern for any insurance customer is to get the best value for their insurance dollar.

Progressive made waves several years ago with their innovative willingness to compare their insurance rates to key competitors on their website – a feature that they still boast today. This competitive rate approach sends a clear message that Progressive is more interested in saving the customer money than simply selling insurance coverage.

Check out one of Progressive’s televisions ads to see this brand promise in action:



Customer Centric Lesson #3: Differentiate with customer service.

As any home or automobile owner can attest, they often don’t think or worry about their insurance until they actually need it. Filing a claim or getting assistance should be easy, efficient, and straightforward and Progressive reinforces this brand promise in another of their latest television ads:



Perhaps other companies can learn a lesson or two from Progressive.com. Their brand promise clearly focuses on the customer, they address many of their customers biggest issues and concerns, and they focus on delivering great customer service.

Note: I am not a Progressive customer, nor am I associated with Progressive.com any way.