|
|
Implementing CEM to Achieve Results
With Research Findings in Polish Market
Mr. Shaun Smith
Author and Founder, Shaunsmith+co
G-CEM International Partner (UK)
www.shaunsmithco.com
This article is exclusively written for G-CEM.
CEM fails in so many organisations because some fundamental principles are forgotten.
This article will share some of the experience we have gained in Smith+co working with leading brands around the world to actually implement CEM to achieve significant results and the research we have conducted that indicates what can go wrong with CEM implementations.
Over the past few years I have been asked to give a number of speeches and workshops on CEM in Eastern Europe. It became evident that interest in CEM was spreading quickly and a number of organisations were in the early stages of implementation. We decided to conduct research in the Polish market in early 2008 with our local partner, Executive Conversation Polska, to find out the level of awareness, enthusiasm and the current status of implementation of CEM.
We used a number of dimensions identified in our book 'Managing the customer experience - turning customers into advocates' . In this article we reveal our research findings, but more importantly, some of the lessons we have learned in working with organisations world-wide to implement CEM successfully. To that extent, the lessons we will share are universal and have relevance for the many US and UK companies still struggling to execute CEM strategies.
1. Successful deployment requires active and continuing involvement of leadership
Leadership is vital for any significant organisational change yet, as we concluded in our book 'Uncommon Practice - people who deliver a great brand experience' , most leaders 'stumble the mumble' rather than 'walk the talk'. They fail to clearly communicate its importance to the organisation and then fail to take decisive action to demonstrate that it is high on the management agenda.
Our survey in the Polish market revealed some interesting perspectives in this regard. For example, 63% of the senior management respondents in our survey agreed with the statement 'Leaders make decisions that are consistent with our customer experience strategy' yet only 41% of their non-management colleagues agreed with them. This matters; no matter how committed to customer experience you feel, it is what you do that counts. We found the highest correlation in the survey between those respondents agreeing with the statement just mentioned and ?Our company's top executives demonstrate their commitment to our customer experience strategy'.
Our experience has shown, time and time again, that the most significant factor in creating strong companies are leaders who take personal responsibility for communicating, demonstrating and rewarding brand or company values. Amazon.com CEO Jeff Bezos says "Our mission is to be the Earth's most customer-centric company". Jeff Bezos and his executive team personally demonstrate their commitment to this mission through their actions and decisions and in the process have created an enviable reputation for reliability and one of the most widely recognised brands in the world today. Amazon reports one of the highest Net Promoter Scores (highly satisfied customers) we have seen.
2. Ensuring cross-functional ownership is vital
If the CEO or President recognises that it will take more than rhetoric to make a difference, the next common mistake is asking the Marketing VP, HR Director or Customer Service Executive to fix the problem.
The brand and the customer experience must be owned collectively by the senior management team. Each function has its particular part to play, but to be successful, these three functions must operate as what we refer to as a 'Triad' to optimise resources, efforts and budgets to create an organisation-wide strategy for delivering the brand. Our research found a strong positive correlation between the statement 'We have created a partnership between marketing, HR and Operations to define and deliver the customer experience' and another survey item, 'Our leaders have been trained as champions of our customer experience and are leading its implementation'.
When we work with clients on CEM projects, one of our first actions is to form a Steering Group comprising executives from Marketing, Operations or Customer Services and HR. One of the first meetings with this group is to educate them on what it means to lead this kind of change effort. The fact is that the experience you deliver is a result of these functions working together around a common agenda. Unfortunately, in many companies the effort is fragmented and often beset with politics. This was the mistake that the branding agency made with our hospitality client- they had been commissioned by the marketing department and failed to form a cross-functional working group to manage the process. Despite the quality of the experience design it failed to gain traction with the operators because they had no part in its creation.
3. Focusing on your most strategically important customers
The starting point for our work is collecting customer data to inform the definition of a promise and design the new experience. The most frequent client response to this suggestion is that they already have lots of customer data and research so we needn't bother with more. In reality, whilst organisations undertake customer research and collect mountains of data, relatively few know who their most profitable (not largest) customers are. The fact is that a few customers will typically represent the significant proportion of your profit and these are the ones to focus improvement efforts on.
For example, Harrah's (the US-based entertainment and gaming company) found that 82% of its profits came from just 26% of its customers and yet it only enjoyed 36% of their spend. However, when these customers were very satisfied their average spend with Harrah's increased by 24%. By focusing on this target segment Harrah's was able to fine-tune its offer to create greater value for these profitable customers. In the following year, revenues increased by 17% .
This would seem to be an area where companies in Poland also feel on strong ground because over 75% of executives agreed with the statement 'We have identified our most profitable customers'; however, only 52% feel they are clear about how these customers rate their experience on the things that are most important to them.
4. Finding out what these customers truly value
It is all very well knowing who your most profitable customers are, but if you do not know what these customers value and the three or four most important attributes that drive their intention to repurchase, you cannot influence their behaviour. Without the answers to these questions you may have data, but you do not have insight. A key component of a branded customer experience is being differentiated in a way that is valuable to target customers.
In the case of Harrah's, the gaming experience was redesigned to increase customer satisfaction and differentiate the brand. So for example, its 'Total Gold' loyalty program was transformed into 'Total Rewards', segmenting customers into Gold, Platinum and Diamond categories depending on their loyalty to Harrah's. Harrah's executives discovered that delays at reception were a turn-off for customers, so Gold customers benefit from fast-track lines, Platinum customers have shorter lines still, and Diamond customers have no lines at all. Harrah's share of these customers spend rose significantly.
5. Being clear about what you stand for
Some years ago, UK-based bank Barclays aired a television advertisement called 'Big Idea'. It was a beautifully crafted ad featuring Anthony Hopkins as a big shot businessman with a big house, a big car and a big meeting to attend. The tagline was 'A big world needs a big bank'. The advert received a bronze award at that year's British Television Advertising Awards, yet customers replied with a less than enthusiastic 'big deal!' The ad simply reinforced common customer pre-conceptions about large banks: that they do not care about the average person and are interested only in making as much money as they can.
Contrast this with First Direct, the online British bank. Executives at First Direct spoke to their most loyal customers and asked them what they liked most about the bank. Their research identified that being able to engage with a real person was an important driver of satisfaction. As a result, First Direct's advertising agency created ads that featured customers speaking of their experience calling First Direct and getting through to a real person, any time of day or night.
The adverts' engaging message and apparent empathy struck a chord with target customers. First Direct promises to be the bank that is 'designed to fit around you, not us'. It is no accident that First Direct claims to win a new customer every 8 seconds and is the UK's highest rated bank , or that 36% of its new customers join as a result of a personal referral. First Direct's customers have become the bank's biggest advocates reducing its costs of sale and increasing its share of these customers' spend. If you would like to see these ads please see my article: http://www.mycustomer.com/cgi-bin/item.cgi?id=134190
In the Polish market, 55% of executives feel that they have 'defined a brand promise that differentiates us in the eyes of our target customers', but fewer (35%) 'have mapped our customer touchline to determine the key points of contact our customers have with us and how our promise should be delivered at each'. This omission is quite common in our experience and takes us on to our next point: making a promise to your customers is one thing, delivering it is quite another.
6. Delivering the promise at every touch point
In response to the statement 'We have identified how to improve our services and processes to deliver our customer promise in a way that is consistently valuable to target customers', 41% of executives agreed achieving a mean score of 5.8 on the ten point scale indicating that this is a significant opportunity for many organisations. Without a rigorous process for mapping the customer touchline and designing the experience to deliver the promise, the danger is that an expectation will be raised that you cannot deliver.
Stelios Haji-Ioannou (Chairman of easyGroup and founder of easyJet) makes this clear by saying: "You can spend 15m on advertising, go bankrupt and your name can still mean nothing to people. Your brand is created out of customer contact and the experience your customers have of you."
7. Providing 'branded' training to ensure that employees understand the brand story
Many organisations provide customer service training yet few are differentiated in the service they provide. The reason is that 'vanilla' training creates 'vanilla' service. This is not to say that all generic service training is bad - it is not. In fact there are some very good off-the-shelf programmes that really help to improve customer-facing skills and make service more consistent. But if your goal is to differentiate from competitors this requires 'Branded Training'. In other words, training that is designed to bring to life the values of your brand in a way that is consistent, intentional, differentiated and valuable. Most importantly it has to start at the top.
One of the things we specialise in is to design branded training to bring alive the promise and brand values and cascade these throughout the organisation to align the front-line in a way that is entirely on-brand. It never ceases to amaze me how many organisations believe that they can differentiate their experience by buying in the same generic, so-called 'best-in-class' training packages that are sold by some large trainer providers, with the only change being the company name on the cover.
A key ingredient of training is to build executives into the process so that they have an active role in cascading the message. This is an approach we have used very successfully in our engagements. This would seem to be true in the Polish market too because we found a high correlation between satisfaction with training and the statements 'We have continuing internal communications to build clarity and commitment around implementing the customer experience', and 'Our leaders have been trained as champions of our customer experience and are leading its implementation'.
8. Designing CEM before installing CRM systems
Most CRM systems are installed without any thought about how they will be used to add value for the customer. These powerful systems allow companies to collect knowledge about the customer that can be used to offer them products and services tuned to their particular needs and preferences. For many customers, the acronym ?CRM? stands for 'Constantly Receiving Mail-shots' since many organisations (and banks are the worst) use them as a blunt instrument to stalk, rather than woo, the customer through junk mail.
Some software providers are now designing their products to support the customer experience and build CEM functionality into their call-centre products so that the agent is provided with all the information, tools and measures necessary to deliver the desired experience. However, the experience must come first.
Ed Thompson, Group Vice President at Gartner Research, speaking at a 2008 CRM Summit in London said "In terms of the user experience, perhaps only 4% of customers can demonstrate a genuine return on investment (ROI) from CRM initiatives, mainly because most companies fail to benchmark projects and real success stories tend to be anecdotal." This takes us to our next tip for deployment.
9. Measuring the customer experience
Peter Drucker's maxim that 'what gets measured gets managed' is still true today. Yet most organisations focus exclusively on end-result measures. Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicators - they are a result of differentiation, customer loyalty and brand preference.
The answer is to move up-stream and measure and manage those activities that deliver the required customer experience and drive customer advocacy. Yet over 51% of the executives we surveyed reported that their organisation did not have a scorecard to measure the customer experience. The mean score for the statement 'We have a scorecard of indicators that provide leaders with objective and timely feedback on how well we are delivering against our promise' was the lowest achieved in the survey, scoring just 4.6 on our ten-point scale.
We have developed a software product we call or CEM+ CalculatorTM that enables our clients to forecast the impact on revenues of improving the customer experience and driving up customer advocacy. This means that it becomes much easier to achieve the funding required and also measure the impact of CEM initiatives.
Our own view is that measuring customer advocacy is one of the most important, but not the only metric in a company's customer experience scorecard. However, what is important is to reward the Key Performance Indicators (KPI's) that you want to move. And that takes us to our last point.
10. Aligning KPI's with the customer experience
One of the lowest scoring items in our survey was 'Leaders measure and monitor the quality of the customer experience'. As many respondents disagreed with this statement as agreed with it. This poor result was reinforced by the fact that only 47% of respondents agreed with the statement 'Our leaders reward employees who put customers first'. The fact is that unless there is a link between the desired business results, the customer experience necessary to achieve it, and appropriate measurement and rewards, then it is unlikely to happen.
You will have seen that many of these best practices are interconnected. Brands are holistic and so senior leaders must manage the customer experience accordingly, understanding that each element either reinforces or dilutes value to the customer. These are the companies who make CEM work and enjoy the business results that flow from this.
We have been working with the luxury retailer Burberry for the past two years to help implement a branded experience in all of its stores. Whilst leading competitors were cutting costs and prices in the recession, Burberry focused on improving the customer and employee experience and actually increased its investment in the most important customer touch-points.
As a result, Burberry saw significant increases in sales growth reporting a sales increase of 21% in April 2009 in a market that had seen steep decline and their results have been sustained. The Luxury Institute issued a press release in April 2010 saying that Burberry has been found by independent research to be offering the best customer experience of any luxury retailer by some margin. http://www.luxuryinstitute.com/
The survey concluded; "The top three factors that shoppers consider before recommending a brand are merchandise, service and store atmosphere. Two standouts across several criteria are British fashion house Burberry and French luxury outfit Louis Vuitton, with 77% of shoppers saying they would recommend Burberry to family and close friends, and 74% saying the same about Louis Vuitton."
The fact is that CEM can bring significant business results but only when these principles are applied to the implementation process.
|
About the Author
Shaun Smith is a G-CEM International Partner and widely regarded as one of the top business speakers and experts on brand leadership. Over the last few years, he has been a key catalyst in expanding management focus from the tactical issues of customer service to the much wider and strategic issue of customer experience. He has developed some of the latest thinking and practice around this subject, focusing in particular on how organisations can achieve brand differentiation and long term customer loyalty through the customer experience. Shaun Smith is an established author on the subject. His first book 'Uncommon Practice- people who deliver a great brand experience' investigates how leading brands differentiate, his second book 'Managing the Customer Experience- turning customers into advocates' is considered to be a landmark text book on how to create branded customer experiences. His latest book 'See, Feel, Think, Do - the power of instinct in business' investigates the role of instinct and innovation in customer experience. He is also the author of the CEM+ SurveyTM and Organisational Alignment SurveyTM. For more information visit his web site at: www.shaunsmithco.com. |
|
Email to Friends |
Print
|
|
|
|
| Top |
|
|
