- By: Kyle Hutchins
“Customer experience” has been one of the big buzz words in business for a while now. Indeed, many companies, across all industries, have refocused on their customers as a means of transforming their business to achieve competitive advantage (see sidebar).
In simple terms, customer experience is about uniting customer demands and expectations with operational and technical capabilities to create a platform for innovation, growth and profitability. On the surface, that sounds pretty straightforward. Yet we see our clients and, in fact, many practitioners still struggling to bring this concept to life. Not dissimilar to the rise and fall of customer relationship management (CRM) initiatives in the late 1990's, executives understand the concept of customer experience, but the underlying technologies and processes that enable it remain fragmented and unproven—and companies aren’t seeing the value they expect from their investments.
Accordingly, customer experience is in a bit of a phase of uncertainty. Based on what we see in our client work, we believe it requires a shift in thinking and execution—what we’re calling, “customer experience next.”
Turning the corner from issues to opportunities
From marketplace experience and observation, we see several recurring issues that are impeding success:
- Organizations spend too much money on customer acquisition today and not enough on retention and cross-selling
- Companies lack customer profitability metrics to determine which customers they need to keep
- Most organizations have ample technology capabilities to support customer experience strategies, but they lack referential and data architecture to deliver on the promise
We have found that taking a “hard science” approach has helped companies optimize revenue and capitalize on customer experience opportunities. This means analyzing marketing spend, consumer behaviors, call center operations, sales effectiveness and digital properties. It means defining and developing meaningful metrics that enable analysis of customer profitability and other key performance measures. Only then will you have the insight necessary for developing an ROI-based strategy and for managing the program through implementation with the key goal in mind: More engaged and profitable customers.
Four “defaults” for starting to realize value
Designing a customer experience program that focuses on these four defaults during the first 12-18 months can deliver tangible benefits and provide the foundation for longer-term success and greater value.
- Aim for at least a 300-percent return on investment. We have found that the best ideas meet or exceed this mark, and changing a customer experience culture requires bold steps and significant wins.
- Don’t get stuck in the data. Focusing on customer profitability and establishing proven and effective customer experience measures (Customer Effort Score, Net Promoter Score, etc.) are systemic, dependable and actionable steps that can lead to early results. But, don’t let imperfect data be the reason you don’t take action. Trust your instincts and make decisions with directional information–fast feedback and iterative testing are here to stay.
- Prioritize high-volume transactions with back-office implications. Find the moments that matter, ones that limit your ability to sell, ones that are rife with manual processes, ones that distract you from offering high touch service to your customers. Too often, businesses try to tackle audacious customer experience projects, without first getting the basics down.
- Focus on improving customer processes that touch existing customers. There is all kinds of research that shows retaining existing customers costs far less than attracting new customers. Plus, happy existing customers supplement marketing with “free” and credible word-of-mouth support—particularly in this age of social media. Prioritizing initiatives that improve experience for existing customers has the potential for high impact.
A well-designed customer experience program can and will create competitive advantage. But achieving it will require some fresh thinking.
Darwinism in a consumer-driven world
Today, the business world is at a crossroads. As common management approaches prove increasingly obsolete, companies must turn to customers to reinvent their ways. But the multiplication of actors and channels has led to a high degree of complexity that requires strong guidelines to redefine organizations.
Together with our alliance partner, BearingPoint, as well as academics and sociologists, we have designed what we call the “nature-inspired models”: four new approaches to deal with digital-era business ecosystems’ fast, ground-breaking evolutions. These models are useful to think about modern commerce, which, like nature, is intricately interconnected and always in motion. We have captured this thinking in a new book, Darwinism in a Consumer-Driven World.
We strongly believe that understanding and managing initiatives according to these concepts will help companies survive and thrive in the near future. In particular, the ultimate step is to build an all-around customer experience platform, dedicated to offering a unique journey and to building a trust-based, long-term relationship between a company and its customer.
We are excited about the book and look forward to sharing information about it in the near future. In the meantime, please contact the author, Kyle Hutchins, at email@example.com for more information.