The Customer Experience

Published on January 2017 | Categories: Documents | Downloads: 57 | Comments: 0 | Views: 316
of 5
Download PDF   Embed   Report

Comments

Content


A Conference Board survey of 658 CEOs in multiple
industries around the world rated “sustained and
steady top-line growth” and “proft growth” as their top
two priorities.
2
These same CEOs also indicated that
sustained top- and bottom-line growth is diffcult to attain.
The Forum Corporation, curious about the leadership
practices that drive and sustain growth, conducted a
research study to explore the challenges related to creating
and sustaining proftable growth, as well as to identify the
best practices of frms who are succeeding in this area.
3

The research showed that many companies favor organic
growth over other growth strategies, such as alliances and
mergers and acquisitions, to achieve their growth targets.
And there is good reason for this. In several studies,
including one by Marakon Associates, organic growth was
identifed as the growth strategy that is most proftable and
most likely to increase shareholder returns.
4

We learned from our research that leaders who seek to
drive growth, no matter the strategy, cannot ignore the
customer. In fact, one of the two behaviors common to
all growth strategies was to keep an external focus on
customers’ needs, those that are met and especially those
that are unmet. (The other behavior was establishing
a climate of employee ownership.) High-performing
growth leaders outperformed their on-par counterparts
consistently on that practice.
The emphasis on customers is particularly important in
organic growth. Superior customer focus enables:
n Innovation in the form of products and services that are
valued by the customer
n Identification of opportunities for existing offerings in
new markets
n Generation of additional revenue from current customers
and existing offerings
So why do leaders stumble when it comes to customer
focus? According to our research, the two most common
challenges leaders face in driving organic growth are
“cultivating a loyal customer base” and “responding to
customer pressure for improved products and services.”
These seemingly common sense items are apparently
uncommon leadership practice. While companies may
say customer loyalty is critical, and may even launch
initiatives in support of it, that is often the extent of their
commitment. Forum’s research on customer experience
found that the leadership of top management is rarely
mentioned as being essential to creating a differentiating
customer experience. But building customer loyalty
is exactly what is on the agenda of top executives in
companies that offer an exceptional customer experience.
As we learned from one executive recently, “Focus on your
current customers, because they will make or break your
business.”
5

What Is an Exceptional Customer
Experience?
An exceptional customer experience is systematically
designed to meet and deliver on customer expectations at
every critical interaction. In today’s competitive landscape,
delivering a valuable customer experience becomes
increasingly important. When products can be copied,
processes matched, and store layouts duplicated, it is
the people and their behaviors that create distance and
differentiation from competition. It’s about the ability of
employees to respond to customers based on their unique
needs and to engage them emotionally in a memorable
experience. Ultimately, it is about creating value—for
customers, for employees, and for the company. Dov
Seidman corroborates this position when he says that
“sustainable competitive advantage comes more from
how you deliver your products and services than what the
products and services are.”
6
Why the Customer Experience Matters
The value created for companies who do focus on the
customer experience can be signifcant. A study by
point of view
The Customer Experience:
People Make the Difference
You cannot generate superior long-term profts unless you achieve
superior customer loyalty. Moreover, the increased speed of change,
the need for fexibility in individual roles and team structures, and
the cutthroat war for talent further intensifes the need for employee
loyalty … By being loyal, leaders will earn the loyalty of those around
them.
—Frederick F. Reichheld
1
2
point of view
Accenture found that if a $1 billion enterprise improved its
performance from average to high across all aspects of the
customer relationship, it could achieve as much as $120
million in pre-tax proft.
7

Conventional wisdom says that increases in customer
satisfaction will have a corresponding increase in customer
loyalty. Unfortunately, this is not true. The Corporate
Executive Board brief Climbing the Service Curve
8
points
out that the link between customer satisfaction and
behavior is not a straight line as most people thought, but
more like an S curve, with two points of infection (see
graph above). The frst is the satisfaction point; the second
is the experience point. The plateau in the middle refects
the zone where incremental investments in customer
satisfaction will have no incremental impact on customer
behaviors, and therefore, no impact on loyalty.
The two points at which investment in the customer
experience does pay off achieve different results. Investing
in the creation of a predictable experience stabilizes the
customer base, effectively “closing the back door” and
keeping customers who may have otherwise defected.
While not advocates, these customers will have a
predictably positive experience, enjoying service providers
who demonstrate best-practice service behaviors and
standards.
The other point at which an investment makes sense is
at the experience point, when a company is interested
in creating customer advocates. Customers at this point
on the continuum experience an exceptional customer
experience; it is emotionally connecting, based on what
target—most valuable—customers value. It also is
consistent with the unique aspects of the company’s brand
identity. These customers are on the path to becoming
loyal patrons.

The Customer Experience Is Powered by People
When it comes to engaging your customers emotionally,
it’s your people who make the difference. Excellent
products and reliable processes are part of the equation,
of course, but in order to create a differentiated
customer experience, you need employees who can
make memorable connections with customers.
Employees must be ready to deliver a reliable yet
personalized experience to individual customers. This
involves a consistent understanding of the company’s
brand message and possessing the skills, attitudes, and
resources to handle each interaction, while also having
the situational judgment, in the moment, to customize
the experience to what each customer values. No
script, process, or set of policies alone can substitute for
the skill, judgment, and commitment of your employees.
As Danny Meyer, founder of the Union Square Café in New
York City, said, “If you simply have a superior product or
deliver on your promises, that is not enough to distinguish
your business. There will always be someone else who
can do it or make it as well as you can. It is how you
make your customers feel while using your product that
distinguishes you. It’s the experience.”
11

Advocacy
Dissatisfed
Extremely
Satisfed
Neutral
Diminishment
Customer Satisfaction
Defection
Relationship
Expansion
C
u
s
t
o
m
e
r

B
e
h
a
v
i
o
r
Stage 1: Achieve predictability.
Make the customer experience
consistent and intentional.
Stage 2: Create advocates.
Make the customer experience
refect what your customers
fnd valuable.
How must our
people
perform?
People
How must our
processes
perform?
Processes
How must our
products and
services
perform?
Products/Services
How must our
environment
look and feel?
Environment
What value
must we
provide that will
drive desired
customer
behaviors?
How must our
customers
behave to
ensure we
reach our
goals?
What are our
strategic/
fnancial
goals?
Customer
Experience
Customer
Behavior
Business
Results
What Is Your Customer Experience Today?
Dynamic Scorecard
While both points of investment generate a return, a recent
study by McKinsey gives more evidence of the fnancial
impact resulting from the creation of an engaging customer
experience. They found that managing customer migration,
which they defned as “signifcant changes in customer
relationships up or down,” has an impact on the business
that is “10 times the value of (managing) defection alone.”
9

In another study done by the Economist Intelligence Unit,
executives said that they believe customer engagement will
have “double the impact on their companies’ growth in 5
years than it does presently.”
10
...
3
point of view
… and Especially by Leaders
Great customer experiences may be realized in those
key interactions between employees and customers, but
success is ultimately rooted in leadership action. A truly
differentiated customer experience requires the attention
and energy of senior leaders across all functions. It is
up to the leaders to set the direction for others to follow.
As we reported in our book Managing the Customer
Experience: “Truly understanding what customers value
and then executing to deliver that value requires the
courage of conviction … Critical, also, is an ability to
engage the troops to actually deliver the experience.
It is up to the leader to unleash employee power to
build and execute an experience that is untouchable by
competitors.”
12

A large part of how leaders “unleash” the power of
employees is creating the leadership climate that enables
and empowers employees to deliver the experience that
customers fnd so valuable. Climate, a concept pioneered
by Forum, is defned as “a set of measurable properties of
the work environment based on the collective perceptions
of the people who live and work in the environment, and
demonstrated to infuence their motivation and behavior.”
13

Of the fve drivers of climate, leadership practices account
for up to 70 percent of the variance in organizational
performance. Therefore, the impact of the leader on an
employee’s willingness to deliver the customer experience
is powerful. Managing the climate is the single most
powerful action a leader can take.
For those who think that climate does not extend to
customers, beware. Customers can perceive the climate
of an organization or team in the course of brief visits or
interactions, and the climate they perceive either attracts
or repels them. Research on retail banks found that
customers asked to rate the climate of a bank branch—
based on a visit of only 15 minutes—rated the climate
virtually the same as did the branch employees.
14
When
leaders work to create a customer-attracting climate—
improving climate in all three zones—more customers feel
positive about doing business with the company.
Forum’s Core Solution
To deliver on the customer promise, the entire
organization—leaders, employees, products, and
processes—must be aligned and working in concert. While
Forum understands and works in partnership with all these
elements, our primary focus is on equipping employees
and leaders with the attitudes, skills, and tools they need
to deliver on the promise.
Forum’s approach to implementation starts with a research
phase to understand what target customers value most.
This is the foundation upon which the new experience will
be built and ultimately delivered. We then focus on three
distinct types of efforts to drive the change through the
organization:
n Align: To achieve alignment, we work with client
organizations to build the picture of what the new
experience will be, and begin to build the case for
change. This is then shared with leaders at all levels
of the organization, beginning the process of aligning
and engaging all members of this organization to the
new experience. The focus is not only on preparing
the organization for what the new experience is, but
also ensuring they understand why the experience is
important.
n Equip: This is the effort to build skills at all levels—
from the front line to the CEO—so that employees are
consistently prepared to deliver the new customer
experience.
n Sustain: Here the emphasis is on embedding the
changes in the organization’s culture and on aligning
systems to support the new experience. The goal is to
make the initiative become “the way we do business.”
For one example of results we’ve achieved, see the box on
the following page.
Leader/Manager
Climate
Employee
Climate
Customer
Climate
Building a High-Performance Climate
point of view
4
Häagen-Dazs Shops International, in association with Forum, embarked on an ambitious customer experience

project
with the aim of growing sales revenue by 10 percent. Häagen-Dazs is one of the most recognized and respected
ice cream brands in the world, with strong associations with quality and luxury. However, evidence showed that
customer experience in Häagen-Dazs shops did not match the status of the brand. The shops business needed
to change the way it thought about and dealt with customers if it was to fght off intense competition and fulfll its
growth potential.
Customer feedback indicated that service was the key driver in increasing loyalty and customer spending. This
commitment to service needed to be the key component of a wider initiative to enhance the ambience and
appearance of the shops and to align them with the Häagen-Dazs brand.
The core of the service work was a customer experience “blueprint” that defned the experience Häagen-Dazs’s
target customers most value, and the expected and differentiated employee behaviors that must be delivered at each
“touchpoint” in the customers’ journey.
The differentiated experience was piloted in four regions, over a 6-month period, with a wide variety of cultural
differences and business models. Service staff and shop managers underwent an innovative learning experience
to help them understand the new skills. Häagen-Dazs’s internal trainers or “learning champions” delivered and
reinforced the training. Recruitment, reward, and recognition plans were also linked to the delivery of the experience.
The results in the pilot markets have exceeded expectations, with an average of 12 percent revenue growth achieved
and loyalty increasing to 43 percent. Moreover, there has been a fundamental change in the way these markets view
their business, which means that this work should continue to reap dividends in the long term.
Forum is a global professional services frm that mobilizes
people to embrace the critical strategies of their organization and
accelerate results. We help senior leaders with urgent
strategic agendas equip their organizations to perform, change,
and grow. Our expertise is built on decades of original
research; our business insight keeps companies out ahead of
their markets, competitors, and customers. Harvard Business
Press published Forum’s latest book Strategic Speed in 2010.
For more information, visit www.forum.com.
© 2009 IIR Holdings, Ltd. All Rights Reserved.
point of view
5
Endnotes
1
Loyalty Rules, HBS Press, 2001.
2
The CEO Challenge, The Conference Board, 2006.
3
One Size Doesn’t Fit All: The Distinct Leadership Capabilities for Organic, Alliance, and M&A Growth, The Forum Corporation, 2007.
4
Marakon Associates and the Economist Intelligence Unit, 2005.
5
One Size Doesn’t Fit All, Forum, 2006.
6
How: Why HOW We Do Anything Means Everything … in Business (and in Life), Wiley, 2007.
7
Mark T. Wolfe, Stephen F. Dull, and Timothy Stephens, “Customer Relationship Management: Divide and Conquer,” Outlook 2000, Number 2.
8
Published in 2003.
9
“The New Era of Customer Loyalty Management: Opportunities to Create Proftable Growth,” McKinsey and Company, 2001.
10
Beyond Loyalty: Meeting the Challenge of Customer Loyalty, March 2007.
11
Setting the Table: The Transforming Power of Hospitality in Business, Harper Collins, 2006.
12
FT Press, 2002.
13
George H. Litwin and Thomas B. Wilson, “Organizational Climate Is a System,” Inforum, Volume 1, Number 1, Summer 1978.
14
Robert Stringer, Leadership and Organizational Climate, Prentice Hall, 2002.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close