Sprint's Palm Pre Experience

On June 6, 2009, Sprint proudly launched their latest flagship product - the Palm Pre. While numerous reports have lauded the success of the launch and the phone itself, a more important storyline is the strides that Sprint has made in their overall customer experience. Sprint's customer experience problems have been well documented. Their ability to effectively address those problems may be the one thing that will make or break the company. Although Sprint's recent performance with the Palm Pre had its pro's and con's, Sprint appears to have done this one right.

Sprint obviously has a lot riding on the Palm Pre. Over the past few years, Sprint's customer satisfaction woes have been well documented and new CEO Dan Hesse has made it clear that improving customer satisfaction is priority number one. While Sprint has been making strides on fixing their problems, no one seemed to notice. Sprint needed to grab the stage - even if for just a short period - to demonstrate that things had changed. The Palm Pre has provided that stage and Sprint's performance is sure to be closely scrutinized. Dan Hesse went so far as to refer to last weekend's launch as a "coming out party" for Sprint.

THE TOTAL CUSTOMER EXPERIENCE

While some may look only at the launch day to determine if Sprint is truly different, a more important barometer should be the overall customer experience. The experience began when Palm and Sprint unveiled the Pre at the Consumer Electronics Show (CES) in January. There had obviously been a lot of pre-work done (pun intended); Sprint had established an exclusive arrangement with Palm to create the most innovative new device since the iPhone. This exclusive partnership alone highlighted Sprint's innovative roots and placed it squarely in the spotlight to deliver something special.

The pre-launch buzz began to build from that point forward. Special blogs were created, tweeters were tweeting, and rumors abound. If Sprint and Palm wanted the spotlight, they surely got it.

How Sprint and Palm would perform in the spotlight would be an important part of the overall customer experience. Fortunately for Sprint and Palm, they performed admirably.

ATTRACT

Building upon the success of the CES event and the subsequent interest in the Palm Pre, Sprint and Palm responded by launching special web pages to try and quench a seemingly unending thirst for Palm Pre news. While Sprint and Palm web sites offered little to any additional information regarding the Pre, the blogosphere was kicking into overdrive.

Hundreds of smart phone enthusiasts began to sleuth every possible angle to learn more about the Palm Pre and its eventual launch date. It became almost a game; the dearth of information from Sprint and Palm only fueled more speculation about pricing, features, and availability. Most companies would pay dearly for such successful viral marketing.

Eventually Sprint launched its own series of 'Now Network' ads that seemed to tease the audience even more by showcasing the Palm Pre at the end of each ad. Even though the phone had not yet been released, the ads whipped up even more anticipation for the eventual launch.

QUALIFY

With the bait firmly set, it was now up to Sprint to determine how to best land as many prospects as possible. In a very smart move, Sprint launched a Palm Pre landing page that contained a simple prompt: "Sign up to be notified when the Palm Pre is available."

It was a simple and brilliant way to allow prospective customers to self qualify themselves for Sprint. As a result, Sprint was able to collect a highly qualified list of prospects that could be used for target marketing to ensure that the prospects were converted to customers when the Pre became available.

That's exactly what they did.

INTERACT

Prospects that self-qualified themselves, as well as existing Sprint customers, received regular email newsletters that informed them of special offers, accessories, new plans, and other products. This simple but effective interaction helped to keep prospects engaged during the waiting period between the CES product announcement and the eventual product launch on June 6.

Unfortunately, the majority of these email newsletters provided few additional details about the Palm Pre. Perhaps the lack of Palm Pre related information was part of their strategy of secrecy, but this is one big opportunity that Sprint may have missed. If they had provided more juicy tidbits through this channel, perhaps they could have significantly grown their prospect list as more and more people were clamoring for information.

Although many people get annoyed with companies that overload their email inboxes, this is a case where I believe that additional and more timely communications would have been welcomed.

SPECIAL TREATMENT

As part of Sprint's drive to improve customer satisfaction, they also have begun to more actively utilize a loyalty program called Sprint Premier, which rolled out in February of this year. Once again, Sprint did this right. Long time Sprint customers were automatically enrolled in the program and notified via email and or direct mail that they were being recognized for their loyalty.

The loyalty program includes perks and privileges like most programs of its kind. For example, one direct mailing included a special $25.00 coupon that could be used to purchase any accessory. Unfortunately, this excluded Palm Pre accessories - at least during the launch weekend.

Perhaps most important to the customer experience, Sprint sent a special notification to Premier members that invited them into stores one hour before opening time on launch day to demo and purchase the Palm Pre. While others were planning overnight camp-outs to be the first in line to get the Pre, Premier customers got special treatment.

Overall, it was a nice touch and a great way to reward some of Sprint's most loyal customers.

BUY

June 6th was an anxious day for everyone. Sprint and Palm were nervous for obvious reasons. Prospective customers were also anxious in light of the rumored short supplies of the Palm Pre. Although some out of stock situations were reported, the supply situation over the launch weekend did not appear to rain on the parade.

Personally, I arrived at a local Sprint store around 10:30am, nearly 2 and a half hours into the launch day feeding frenzy. I arrived with low expectations; I had resigned myself to the fact that I would probably be greeted by long lines and news of inventory outages.

However, my experience was surprising. Upon arriving at the store, I entered my name into a customer waiting queue. If you haven't been in a Sprint store in a while, they've revamped the store environment as well, capped with a large flat screen monitor that shows your place in the waiting queue in real time.

Overall, the in-store experience was good. I waited only 20 minutes to be greeted by a Retail Consultant, who quickly started the purchase and activation process. While the activation process was underway, he successfully up-sold me on a few accessories for my new Pre. The sales and activation process was lengthy, but largely overshadowed by the anticipation of getting my hands on the shiny new Palm Pre.

SUMMARY

The new phone has worked almost flawlessly on the Sprint Network. Although I have experienced a few glitches, the overall experience has been fantastic. The experience started with growing anticipation since the January 8th introduction at the Consumer Electronics Show and has culminated with the launch of the Palm Pre on June 6th. Daily usage of the Palm Pre, which so far has been great, will only expand upon the overall experience.

While many people will look only at the launch day or even certain characteristics of the phone itself to gauge the experience, Sprint and Palm have done a great job of managing the total customer experience over the past 6 months. Although not everything went perfectly, I give the overall customer experience at grade of 3.75 out of a possible 4.0 experience.

Can Big Be Beautiful?

When it comes to delivering a truly differentiated customer experience, small companies have a distinct edge. In a small business environment where a handful of employees personally serve every customer, know every product or service, and have the authority and responsibility to do the right thing, delivering a unique and personalized customer experience comes naturally.

As companies get larger, however, they often lose that personalized touch. Being big does not preclude the creation of great experiences; it only means that they just have to work a little harder to achieve and maintain it.

Smaller companies have a distinct advantage when it comes to customer experience management. Their very survival depends on managing each and every customer relationship; therefore a customer-centric mindset comes naturally. They are not unencumbered by politics or corporate policies that can get in the way of delivering great customer service. In addition, a handful of employees know every customer and every aspect of the business, which makes them nearly omnipotent when it comes to serving customers. Clearly, sometimes small is truly beautiful when it comes to delivering a great customer experience.

Does that mean that larger companies have no chance of cashing in on customer experience management? Not necessarily; big businesses can overcome many of the barriers that are presented by size and scale. In fact, some large companies have relied on a customer experience differentiation to rise to the very top of their industry.

Being big isn’t always easy. As companies grow, they add channels, markets, products, employees, and thousands of other touch points. They may also add new layers of hierarchy in an attempt to manage new offerings. Each addition can contribute to the exponential growth in the overall complexity of the customer experience. As a result, large corporations can begin to lose touch with their customer’s needs and expectations.

However, being big doesn’t preclude companies from being a leader in customer satisfaction.

Consider the most recent results of the American Customer Satisfaction Index (ACSI) for the Internet Retail industry. The overall king of customer satisfaction in this group is none other that the largest company in the sector - Amazon.com:

Internet Retail
American Customer Satisfaction Index - 2008
Scaled of 1-100, 100 being the best

ACSI Score by Company (Scale=1-100)

• 88 Amazon.com, Inc.
• 87 Newegg Inc.
• 84 Netflix, Inc.
• 83 Internet Retail Average
• 81 eBay Inc.
• 80 Overstock.com, Inc.

Source: American Customer Satisfaction Index. Retrieved from www.theacsi.org on February 12, 2009.

Indeed, big can be beautiful as demonstrated by Amazon.com. Amazon is the oft-mentioned benchmark for customer personalization. Their focus on customer experience has been well documented and discussed. They have utilized technology to provide personalization on a broad scale to provide each and every customer with a sense of familiarity and insight. By leading in customer satisfaction, they are on track to exceed $19B in Net Sales for 2008 according to available 2008 quarterly earnings reports.

Amazon has avoided many complexities that plague other large businesses. They predominantly operate within the on-line channel, which reduces the number of physical locations or markets that they must coordinate. As a fairly young company, they have yet to experience the bureaucracy and paralyzing politics that can build up over decades of growth. And the company still embodies the spirit and vision of its founder, Jeff Bezos, who still runs the company.

Companies like Amazon are proof that large businesses in any industry can indeed compete with a differentiated customer experience. If businesses can overcome the complexities that are presented by size and scale, they can excel at customer satisfaction. By doing so, big can indeed be beautiful.

The Right Way to Measure Your Customer Experience

Attempting to measure the customer experience with a single metric such as customer satisfaction or customer advocacy is overly simplistic and risky. Instead, companies should dig deeper and establish a portfolio of measures that can determine how each touch point contributes to the overall experience.

The Total Customer Experience is Greater Than the Sum of Its Parts

The customer experience is a complex process that can consist of multiple touch points; a process that can be broad, long-running, span multiple channels, and can be influenced by any combination of internal and external factors. Effectively measuring the total customer experience requires a more acute understanding of its individual parts.

The customer experience process does not begin and end at a store, sales representatives, web site or call center. It extends from the moment the customer becomes aware of your company and is comprised of multiple independent interactions, transactions, and contacts along the way.

Each customer experience is made up of any number of touch points and customer encounters, each of which should be measured independently to determine their contribution to the overall experience. An issue encountered at any one of these points can dramatically influence the overall experience.

For example, the quality of an automobile is an aggregate measurement of the quality of the individual parts combined with the integrity of the overall design and assembly process. If any one part fails to perform properly, the overall perception of quality is diminished. Likewise, even if every part is perfectly manufactured but isn’t arranged or assembled in a useable manner – the perception of quality will suffer. Only when quality manufacturing is guided by quality design will the experience truly be maximized.

Although overarching metrics such as customer satisfaction and customer advocacy are quickly becoming standard metrics in today’s companies, attempting to measure the customer experience with a single metric can be overly simplistic and risky. Effectively managing the customer experience requires effective measurement and management of a portfolio of metrics that will provide insights into what is - or is not - working.

Identify Your Touch Points

The customer experience is a collection of touch points encountered by the customer that includes the attraction, interaction, and cultivation of customer relationships. Touch points may include advertisements or promotions, online and in-store shopping experiences, transaction and bill processing, and post-purchase delivery, usage, and support.

The total number of touch points that the customer encounters goes well beyond the point of sale. Establishing an accurate inventory of all of your company’s touch points – both intentional and unintentional - can mean the difference between success and failure.

Defining when and where the customer experience begins and ends is perhaps the most difficult task facing any business. Too often, companies define the lifecycle and customer touch points too narrowly, leaving critical elements of the customer experience to chance.

A touch point is defined as any customer interaction or encounter that can influence the customer’s perception of your product, service, or brand. A touch point can be intentional (an advertisement) or unintentional (an unsolicited customer referral). In this era of broad customer skepticism, the unintentional touch points often matter the most. Which would you trust more: a company’s ad pitch or your best friend’s personal referral for a product? Both are touch points, but one carries much more value than the other.

When your business interacts with a customer, it’s often easy to overlook what is really going on; you are touching them in many, perhaps subtle, ways. When it comes to customer experience management, the right touch can make all the difference. To do it right, you must first identify all of your potential touch points and then work to measure and optimize each one.

Measure Individual Touch Point Effectiveness

Each customer touch point is typically designed for a specific operational purpose. An advertising touch point may be designed to build brand awareness or to identify prospects. A point of sale touch point may be designed to execute transactions. A call center touch point is designed to resolve customer issues. Each touch point is unique and contributes to the overall customer experience in different ways.

Effectively measuring each touch point requires a holistic approach to understand the contribution to both operational and customer relationship objectives. For example, the operational side of an advertising touch point may be measured in terms of a conversion rate. The customer relationship side of the same touch point may be intended to influence the customer’s perception or awareness of the company’s brand.

Measuring the effectiveness of each touch point should balance both operational and customer experience objectives. Operational metrics are typically easily identified, while customer relationship metrics can be elusive. Ideally, timely and recurring customer feedback is collected and compared to operational results to provide a more complete picture. In doing so, companies can obtain a better understanding of how each individual touch point is contributing to the overall experience.

For example, let’s say a business establishes a goal to achieve a 5% click-through-rate (CTR) with their pay-per-click campaign. If the actual campaign achieves 100% of that goal, they might consider it a success. However, customer perceptions might not be so rosy if the ad promised a product, promotion, or discount that isn’t readily available or is difficult to obtain. As a result of customer confusion and aggravation, the company may achieve only 50% of their revenue goals for the campaign.

Measure the Overall Customer Experience

In order to effectively measure the overall customer experience, companies must accurately measure the contribution of each individual touch point as well as the overall level of customer satisfaction and advocacy. At times, the results of one touch point may have an unanticipated affect on other aspects of the experience.

Consider how the individual touch points associated with a fictitious product launch might impact the experience at an electronics store:

1. Product Innovation: A key manufacturer is developing a leading-edge product that will be innovative in the marketplace. The media learns of these developments and publishes reports that an amazing new product is coming soon. Consumer excitement and anticipation is driven to extremely high levels, although actual ship dates remain unknown. (Score: 10/10)
2. Electronics Store: Employees at the store and call center are inundated with inquiries about the pending new product but are unable to provide any additional information regarding availability nor can they accept pre-orders. (Score: 3/10)
3. Marketing: The product launch date is set and marketing begins to actively promote the new product and its innovative features. Consumer anticipation is again driven to new highs as the launch date approaches. (Score: 10/10)
4. Product Purchase: On launch day, consumers flood the store and web site to get the new product. Those customers that are fortunate enough to purchase one are extremely satisfied. (Score: 10/10)
5. Out of Stock: Initial euphoria quickly turns sour as the store runs out of stock and thousands of customers are turned away without one of the highly coveted and heavily promoted products. Customers are told to check back again in a few weeks. (Score: 1/10)

For a handful of customers who were able to purchase the product, they are extremely satisfied with their experience and are willing to tell all of their friends about their latest purchase. Conversely, however, many other customers who were turned away empty-handed are now frustrated and highly dissatisfied with the experience.

Relying solely on customer satisfaction or customer advocacy measures may not illuminate how each touch point contributed to the overall experience. Simplistic customer satisfaction and advocacy scores may mask the underlying factors that either contribute to or detract from an exceptional customer experience.

Evaluating how each individual touch point contributes to the overall experience in this scenario can help to identify specific areas for improvement. While touch points 1, 3 and 4 scored high, touch points 2 and 5 clearly have room for improvement.

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 should establish customer experience measures that correlate individual touch point results to overall customer experience measures.

END NOTES:
“How Do I Touch Thee? Let Me Count the Ways.”, The Clear Brick Blog, April 16, 2008.

Got Blueprint?

Customer Experience: Fine Architecture or House of Horrors?

Imagine what would happen if you had dozens of architects and hundreds of contractors all working on your business. Now image if there was no master plan and each individual spoke his or her own unique language. It’s not hard to imagine that you would have something that would resemble the Winchester House - the now-famous 160-room house that was cobbled together over a 38-year span with no master plan. The house is notorious for stairs that go nowhere, doors that open to a 2-story drop, and a maze of rooms, hallways and doorways that can perplex even the most seasoned of navigators.

Losing site of the big picture can happen to even the best of businesses. When short-term business challenges inevitably arise, decisions can be made in haste to address them. Without a master plan, those seemingly innocent decisions can begin to create a burden for the company in the long run. Independent and uncoordinated business initiatives can result in processes that don’t connect, systems that don’t play well with others, and departments that develop their own unique business lingo that is not universally understood by others.

Like the Winchester house, each individual project may seem like the right solution at the time. However, the compound affect of numerous independent and uncoordinated projects and solutions can result in an Achilles heal for the company: True change becomes increasingly hard to accomplish; integration and sharing of key business data slows to a crawl; and enabling cross-functional processes (aka end-to-end processes) becomes nearly impossible to accomplish. Each function may seem content, but the business as a whole can begin to suffer due to inflexibility, knowledge hoarding, and turf wars.

Indicators that your business may suffer from the ‘Winchester House’ syndrome:

1. Process Indicators: Business processes are not well defined or understood and each function prides itself on simply doing whatever is necessary to ‘get the job done,’ even if it requires winging it now and then. Each functional area designs, develops, and manages its own unique processes with little or no sharing of best practices across functional areas.


2. Technology Indicators: Each functional area has its own set of business applications and data. Applications often don’t work well with others and data is not consistent across departments. Key business information is fragmented and stored in multiple locations and collecting data to conduct company-wide analysis is a long, difficult, and largely a manual process.


3. People Indicators: Individual functional areas have very specialized people, and it takes years to train new employees to ‘learn the ropes’ of the business. Employees care only about their functional area, have their own set of performance goals and metrics, and don’t understand how or why other functional areas get things done.

Unfortunately, when companies lose sight of the bigger picture and become a victim of the ‘Winchester House’ syndrome, the customer experience invariably suffers. Customers can be inconvenienced by inconsistencies between touch points, lack of integration between channels, and absence of a meaningful relationship between customer and company. The company’s internal processes, policies, and infrastructure often ‘get in the way’ of providing the customer with what they want; an emotional connection to the company powered by great service.


See the Forest Through the Trees

Businesses that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. Furthermore, the enterprise blueprint can help a business to develop a detailed master plan for where the business is today and where it is going.

An enterprise blueprint can help any business to avoid the ‘Winchester House’ syndrome by serving as a detailed model for how the customer experience is influenced and enabled by the compilation of people, process, and technology assets. A comprehensive enterprise blueprint will consist of a detailed definition and model for each major component that comprise the business. This model can be invaluable for identifying any current deficiencies as well as charting a future course for the business.

A comprehensive enterprise customer experience blueprint includes several key dimensions:

1. Customer Experience Lifecycle (Customer): A formal definition of the customer experience lifecycle process from the customer’s perspective. The process includes a complete end-to-end view of how customers are attracted, acquired, facilitated, served, and cultivated well after the point of purchase.


2. Enterprise Business Process (Process): A formal and detailed enterprise process model that defines all major processes, sub-processes, and activities that comprise the enterprise. Ideally, the process model should be defined as a hierarchy to allow both low-level analysis and optimization as well as executive-level roll-up of detailed activities into larger process areas.


3. Enterprise Systems Architecture (Technology): A complete information technology model that identifies and defines key IT capabilities, applications, data, and infrastructure. Ideally, the components of the IT architecture model should be expressly linked to the customer, process, and people dimensions of the blueprint.


4. Enterprise Organization Chart (People): An enterprise-wide organization chart that includes an up-to-date definition of the reporting structure, roles, and responsibilities.


5. Enterprise Business Metrics (Value): A standardized definition of all key business metrics that includes a definition of how the metric is calculated and where key data is sourced from in the enterprise.


6. Corporate Strategy (Strategy): A clear and well-defined strategy that sets the long-term goals and directions for the company. The corporate strategy should include components to define specific strategies for areas such as the brand, market, product, service, price, promotion, channel, and customer experience.

Enterprise Blueprint – It Does Your Business Good

Businesses that are seeking clarity to their current and future business environment can develop their own enterprise customer experience blueprint by identifying and analyzing their key business assets:

1. Assemble available business artifacts: Gather all available customer experience processes, business processes, technology architectures, organization structures, business metrics, and strategies that are available for the business.


2. Identify gaps and inconsistencies: Evaluate the existing business artifacts to identify what is missing, where inconsistencies or duplications occur, or where additional detail is lacking for each of the major dimensions (customer, process, people, technology, value, and strategy).


3. Create standard definitions and assemble the blueprint: Create and agree to a common set of standards to accurately define and describe each dimension of the blueprint and close any gaps that are identified. Consolidate and summarize all artifacts into a comprehensive enterprise customer experience blueprint and keep them up to date. Use the blueprint as a management tool to guide the business going forward.

Developing and using a comprehensive blueprint has its benefits; businesses that define and maintain a comprehensive enterprise customer experience blueprint can improve their return on investments, increase productivity, and improve the customer experience:

• Improved ROI: Initiatives that are better aligned with the enterprise blueprint can result in fewer conflicts and duplication of efforts. Furthermore, short-term efforts can be better aligned with long-term goals so that all resources are rowing in the same direction.


• Increased Productivity: Business can run more smoothly and produce more for the same or less effort by leveraging common resources, speaking the same process and business metric language, and by using a common and consistent set of information. Furthermore, businesses can make better decisions based on a more holistic and consistent view of enterprise-wide capabilities, issues, risks, and opportunities.


• Improved Customer Experience: Businesses that have aligned their people, process, and technology components are better equipped to provide meaningful customer experiences. When aligned and consistent, the business infrastructure can serve as a true enabler – rather than a hindrance – to powerful customer experiences.

Executive Summary

Over the course of the lifetime of a business various business challenges, opportunities, and issues will arise and be solved by numerous and seemingly innocent business decisions; decisions that result in new processes, organizational structures, and systems. Without an overarching blueprint to guide these decisions, however, the legacy of various and uncoordinated initiatives can be crippling. As more and more independent decisions are made, the weight of inconsistent processes, duplication of duties, and incompatible systems can burden both the company and the customer.

Business that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. A comprehensive enterprise customer experience blueprint includes several key dimensions including a 1) Customer Experience Lifecycle Process (Customer), 2) an Enterprise Business Process Model(Process), 3) an Enterprise Systems Architecture (Technology, 4) an Enterprise Organization Chart (People), 5) Enterprise Business Metrics (Value), and 6) a Corporate Strategy (Strategy).

If your business were a house or building, what would it look like to your employees and customers? Would it be structurally sound, open, and inviting? Or would it be cluttered, broken up and difficult to navigate?

Having the right blueprint can make all the difference.

Why Customer Experience Matters Most

Companies have long competed on manufacturing capabilities, innovation, or traditional customer service. But finding new ways to create a differentiated offering in those areas are increasingly difficult to find. As a result, customer experience has emerged as the new battleground to create long, broad and deep customer relationships; relationships which can differentiate your company and deliver significant value to the bottom line.

Strategically, a unique customer experience can differentiate your company in the marketplace. In a marketplace where competitive parity and/or commoditization have set in, customer experience becomes one of the few alternatives for strategic differentiation. Perhaps an over-cited example is Starbuck’s, where they have converted coffee from a commodity into a destination site that plays to customer’s emotions, tastes, and a feeling of prestige – mostly based on a unique customer experience (and some pretty good coffee, too.)

Optimizing the customer experience may sound like another noble cause, but the results can be real. Let’s take a simple example of two truck stops along a major interstate highway that both sell gasoline at the same price. The first station is clean, well lit, and has a pay-at-the-pump features. The second station has paint chipping, a broken sign, and requires that you pre-pay for gasoline. It’s pretty easy to guess that while the second station may have an occasional customer wander in, the first station has more repeat customers and customers who are willing to buy other products and services. Simply put, that means more revenue (more customers for longer) and higher profits (selling more products and services to the same customer for the same attraction costs).

Achieving real results from an improved customer experience is as straight forward as a-b-c. The revenue that you realize from each customer is determined by a) depth, b) breadth, and c) duration of your relationship. Improve upon any of these key factors and you can realize significant results.

The depth of your customer experience is the level of commitment, loyalty, and meaningfulness of your customer relationships. Customer relationship depth can be measured in several ways, but perhaps the most obvious is the frequency of customer visits or transactions. For example, a customer may get his hardware supplies at a local hardware store for smaller items, but shop the big-box hardware store for larger items. Increasing the depth of the relationship means converting those transactions from the other store to yours by delivering a substantially better customer experience.

The breadth of your customer experience is the number of reasons that your customers transact with your company. Customer breadth can be measured by the total portfolio of products or services purchased by each individual customer. For example, the big box retailers such as Wal-Mart, Target, and K-mart have all added product lines, such as groceries, to expand the breadth of their relationship with their customers. Their intent: To be the one-stop shop for everything.

The duration of your customer experience is the total time, from first recognition to final defection, that your customer has a relationship with your company. Customer duration can be measured by the total time that a customer has interacted with your company. The value of increasing customer duration is clear; serving your existing customers is almost always more profitable than attracting new ones. In one example during my consulting career, we spent nearly as much on getting the sale than the total sale was worth. Obviously, expensive customer attraction activities are not profitable for your company. Keep the customers you have.

During the initial incubation stages of your project, you shouldn’t expect to have a complete, detailed and final business case. We address that activity in depth in the following chapter. However, establishing the intent of your project based on the potential value gains can help to formulate the vision, goals, and objectives for the project and properly align your executive sponsors’ expectations and support.

We focus on the value associated with improved customer experiences because it matters. It matters to your customers that make a conscious decision every time they choose to spend their dollars. It matters to your company as you seek to increase revenues and profit margin. And it matters to your stakeholders to know that your company has an unbeatable competitive advantage in the marketplace.

Focus on the value of the customer experience – because it matters more than anything.

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, February 6, 2008

Inside Jobs, December 14, 2007

"Hi, How May I Offend You Today?"

As an American consumer, chances are that you have been offended in some way by a company this year. It hasn’t always been that way. Before the current era of mass-everything, there was a real connection between proprietor and customer: a connection that continues to be the envy of most businesses today.

Let me take you back to a time when the customer and business had a real – not artificial - relationship.

THOSE WERE THE DAYS

“Jim was spending a typical fall Saturday working on a never-ending list of home repair projects. Ever since he bought the little two-story fixer-upper, he has been a regular down at the corner hardware store. Earl, the sole proprietor, was from the old school. He didn’t believe in fancy systems or gimmicks; he just liked helping his fellow neighbors. Earl knew everyone by name, and as any good businessperson should – he knew what one of his best customers, Jim, was up to today.

When Jim walked in the door, Earl recognized him like an old friend and immediately asked him about his latest project. Within minutes, Earl had found just the right product and tool that would help Jim get the job done. Earl made a sale as well as a very happy customer.”

That scenario just doesn’t happen often enough anymore does it? Perhaps it was easier back before quaint neighborhood stores were overrun by the big-box retailers and the mass-production of, well, everything. Neighborhood storeowners developed real relationships with their customers; not a relationship defined by a customer record stored in some computer database.

BAD SERVICE - MASS PRODUCED

Unfortunately, in today’s environment of mass-produced products and services, companies rely too heavily on a rapidly changing employee base, and a less than adequate customer database. As a result, it’s far too easy – and common – for companies to offend their customers.

If we were to replay Jim’s scenario in today’s environment, it might go something like this:

“Jim jumped in his car for the second time this Saturday to make the 20-minute drive to a strip mall where the big-box home improvement store was located. On his first trip, the young assistant didn’t really understand what Jim was trying to do and had sold him the wrong product. Now, Jim had to return to the store to exchange it for something else.

Upon arriving at the store, nobody greeted or recognized him, and when he finally tracked down a store employee, he had to re-explain his entire project and problem. After a long deliberation, Jim finally had a replacement product and was ready to check out. But without his receipt for the original product…”

You probably know how the story would go. Too many consumers have been treated just this way. It’s no wonder that many consumers say that customer service across the board is just plain bad.

THE REMEDY?

Unfortunately, we live in a time where mass-produced products and services are the norm. If you work for one of these organizations, you have to make the most of a difficult situation: multiple locations, multiple channels, changing employees, and rising customer expectations. Many companies turn to Customer Relationship Management (CRM) solutions to bridge the gap on poor customer service.

Although CRM solutions can stem the tide of poor customer service, they often can’t achieve the level of customer intimacy that some customers require. CRM solutions do a great job of tracking customer information, transactions, and interactions, but I would argue that a CRM system is only as good as the customer-facing individuals using it.

Ideally, your CRM system should help your organization to keep track of all pertinent customer information:

• Customer Information: This should include all of the basic identifying information for your customer including name, address, email address, telephone number, sex, age, etc.
• Transaction History: This should include a record of all transactions associated with your customer including the transaction dates, amount, products or services purchased, payments, receivables, returns, refunds, etc.
• Interaction History: This should include a record of all contacts made with the customer including telephone calls, emails, newsletters, direct mail, invoices, service calls, etc.

Armed with all of this great information, customer-facing employees should be well prepared to provide excellent customer service, right? In a perfect world, they should. However, there are several factors that can hinder the best intentions of any CRM solution:

1. Employee Behavior & Discipline: Poor customer service can continue even with a CRM solution in place when employees don’t utilize it properly or consistently.
2. Data Quality & Accessibility: A customer database can help to collect and aggregate critical information, but it won’t help if the data is incorrect or inaccurate, or if your employees can’t access it when and where they need it most.
3. Single View of the Customer: CRM solutions in your company are like debt; more is not necessarily better. Too often, multiple CRM solutions arise in an organization, which creates silos of customer data. That can prevent your company from ever getting a single view of your customer – a scenario that can perpetuate poor customer service.

Bad customer service doesn’t need to become a habit. We may never return to the time of quant neighborhood stores, where intimate customer service just came naturally. However, companies can begin to improve their customer service by taking a more customer-centric view of their CRM systems. CRM should not be viewed as the end-all solution, but rather as a enabling tool that, if used properly by your employees, can help to develop a more meaningful relationship with your customers.

You can improve your own customer service by getting the Customer Experience Solution Kit; a complete collection of methods, tools, and advice used by some of the largest and most well known companies to improve their customer experience.

The next time I walk into a business that I frequent, I’d like them to remember me. I’d like them to recall that I just bought something from them last week, or that I’ve been a regular customer for more than a year. I’d like them to ask me how I’m doing, or how they can help me with my latest project – which they should know about. Nobody wants to be greeted with an all too common mantra: “Hi, How May I Offend You Today?”

Lead in Customer Satisfaction, and Lead the Market

Is your business stuck in neutral, or worse, drifting backwards? It doesn't have to be that way. Some companies have figured out the secret for achieving ultra high business performance, and it has nothing to do with anything you'll find on the balance sheet.

An elite set of companies have uncovered the secrets of customer experience to achieve ultra high business performance.

Customer satisfaction is one of those extremely valuable, yet sometimes elusive, business assets. Customer satisfaction won't show up on your balance sheet as an economic asset. However, get it right and your company can soar above all others in terms of profits, growth, and universal admiration.

Wouldn't you love to be part of a company like that? With the right tools and advice, you can.

A Journal of Marketing article published in 2006 demonstrated an amazing correlation between high levels of customer satisfaction and ultra high market performance. Using both back-tested and real-world portfolios, Claes Fornell, et al. proved that there was a significant relationship between customer satisfaction levels and market performance. Furthermore, their study demonstrated that between 1997 and 2003, a portfolio of companies with high levels of customer satisfaction

- outperformed the Dow Jones Industrial Average (.DJIA) by 93%,
- beat the S&P 500 (.SPX) by 201%, and
- schooled the NASDAQ by 335%!

Source: Claes Fornell et al., "Customer Satisfaction and Stock Prices," Journal of Marketing, January 2006.

It should be no surprise that leading customer satisfaction companies are also well represented in Fortune Magazine's list of Most Admired companies. In 2007, companies such as General Electric, FedEx, Toyota, Apple, Google, and Starbuck's were in the top echelon of both the American Customer Satisfaction Index (ACSI) and the top 20 Most Admired companies according to Fortune Magazine. It seems obvious that companies with high levels of customer satisfaction are also universally admired by their peers.

Simply put, companies that are leaders in customer satisfaction can achieve not only good performance, but ultra high performance.


UNLOCKING THE SECRETS OF CUSTOMER EXPERIENCE

So how did these companies unlock the secrets to ultra high performance? Customer satisfaction is obviously the key. But how did they learn to excel in customer satisfaction?

Customer satisfaction is not a single event or discrete attribute. Customer satisfaction is the resulting measure of how well the customer was treated throughout the entire customer experience.

Therefore, in order to unlock the secrets of customer satisfaction, you must first focus on delivering an outstanding customer experience.


CUSTOMER EXPERIENCE MANAGEMENT - THE NEW COMPETITIVE BATTLEGROUND

Customer experience management is not new. However, more and more companies are quickly realizing that customer experience is becoming the new competitive battleground in today's marketplace. And the stakes are high. Those companies that gain an early customer experience advantage build a strong bond between their business and their customers - a bond that is extremely difficult to break. When it comes to customer experience, the first mover advantage can be significant.


NEARLY EVERY COMPANY CAN IMPROVE THEIR CUSTOMER EXPERIENCE

Perhaps no company will ever achieve a perfect customer satisfaction score. On one hand, you simply can’t please all of the people all of the time. On the other hand, however, this means that most companies have a lot of room for improvement.

But improving the customer experience is a serious endeavor. It requires executive commitment, patience, and a clear vision. Any company that is serious about customer experience should first begin to think about customer experience as a process. Like any process, the customer experience process can work perfectly (or go horribly wrong), may contain numerous scenarios, and can be analyzed, re-engineered, and optimized.

The customer experience process does not begin and end at your store, sales representative, web site, or call center. It extends from the moment the customer becomes aware of your company and may last until they die, move, or leave you for another company. In short, the customer experience process is broad, deep, iterative, and (hopefully) long running.

Mastering the customer experience process is no small task. Indeed, great customer experiences don’t happen by accident. They require a keen attention to detail, a focus on every touch point, and an orchestration of all customer encounters regardless of how each customer may navigate your company. Mastering your customer experience must begin with mastering the end-to-end customer experience process.


GET SMART ABOUT CUSTOMER EXPERIENCE

To get smart about customer experience, take advantage of the numerous resources available on the internet. Various online sources provide insights, tools, solutions, and advice on customer experience management. Utilize these resources to develop a strategy and perspective of customer experience that makes the most sense for you and your company.

I also recommend that you check out our Customer Experience Solution Kit. The Customer Experience Solution Kit provides you with strategies, methods, a roadmap, process maps, and advice so that you can conduct your own customer experience project.

Who knows, you just might unlock the secrets of customer experience that drive ultra high business performance.


DISCLAIMER

Past performance is not an indication of future results.