Driven by Knowledge, Collaboration and Transparency
Customer centric organizations set goals and business objectives with customer experience (CX) top of mind. While every organization seeks to increase sales and decrease costs, the path they take to achieve these goals must be uniquely tailored to their customer base, market position and ability to deliver on their brand promise.
Companies that lead their industries in CX enjoy the greatest return on their efforts and investment as shown by ENGINE and others. Specifically, ENGINE interviewed 1,000 CX professionals globally to assess their overall organizations’ CX maturity score and understand their maturity position’s impact on financial performance. As you can see from the chart below, financial performance is stronger among mature organizations. Nearly all organizations in the Rewarding and Designing phases of CX maturity report slight to significant improvements in financial performance during their current versus previous year; whereas, significantly fewer organizations in the Awakening, Discovering or Responding phases show positive financial improvement.
Additionally, Rob Markey discusses his assessment of financial performance among CX leaders in the January-February 2020 edition of the Harvard Business Review. Markey analyzed companies performing at the top of their industries according to CX metrics. Using Net Promoter Score and/or satisfaction rankings to identify industry leaders, Markey observed corporations that achieve and maintain strong CX ratings for three or more years were able to grow revenue roughly 2.5 times as fast as their industry peers and deliver two-to-five times the shareholder returns within 10 years.1
So how do organizations improve their approach to CX?
Regardless of industry, there are several fundamental best practices organizations should have in place to advance their approach to CX.
1. Know your organizations’ current CX maturity
2. Know your customers and how valuable they are to the organization
3. Identify the touchpoints along your customers’ journey that have the greatest influence on overall experience
4. Regularly solicit performance feedback from customers and employees
5. Know how your CX compares to competitors
6. Understand the monetary value associated with your organization’s CX performance
7. Align business objectives and goals with concrete CX improvement initiatives
8. Remove organizational silos in favor of collaboration and transparency to foster sustainable organizational change
Identifying CX Maturity
Customer centricity is the ability to proactively design, implement, manage, and continuously enhance both internal and external factors that influence overall customer experience to positively impact business outcomes. CX Maturity is rooted in organizational performance across eight key elements. Understanding your overall position as well as maturity on each element provides valuable insight into where attention is needed most.
Every organization is on a unique journey toward customer centricity. In order to know how far your organization must travel, you must first identify your current location. ENGINE’s complimentary CX Maturity assessment can be completed by clicking on the CX Maturity link embedded on our website at https://engine-insights.com/product/customer-experience/. A report with your organization’s overall maturity score and performance on each key element will be provided.
Know your customers
It is true that the customer is at the heart of every business, but brands cannot be all things to all customers. In order to provide experiences that exceed expectations, organizations must understand who their customers are, what their needs are and determine if there are segments within their customer base that differ in ways that make them less desirable to maintain in the long run.
As organizations face the challenging reality of limited budgets and disappearing resources, they must be strategic when selecting where to invest. Successful brands realize that customers are heterogenous when it comes to the value they provide. If a large portion of dissatisfied customers are, for example, not members of the target market, do not provide much in terms of return on marketing efforts (i.e. it costs more to acquire the sale than the actual sale amount) and generally wouldn’t be the type of customer you are looking to cultivate a long-term relationship with, it would not be wise to invest in efforts to improve the aspects of the customer journey rated sub-optimally by this segment alone.
Organizations must identify and cater to the customers who are most valuable and/or present the greatest long-term growth potential. We refer to these individuals as target customers. Target customers are not necessarily synonymous with a brand’s target market, however. Target customers are those individuals who provide the greatest lifetime value (revenue), align most closely with your brand position and will remain loyal when their experience aligns with or surpasses expectations. In summary, successful organizations identify the customers of the greatest value and focus resources, time and effort to improve the aspects of their journey that have the greatest influence on loyalty.
Determining customer lifetime value can be complicated. ENGINE can help. Our expert team of analysts and data scientists work closely with our client partners to identify the necessary information present within internal CRM and financial/revenue data streams. We go a step further by linking our clients’ proprietary customer knowledge with behavioral data obtained from our partnerships with third party providers. Then we incorporate the voice of your customers with primary survey data. By including revenue, behavioral and experiential data, ENGINE identifies target customers and the value they represent to paint the most comprehensive picture possible. Armed with sufficient knowledge, our partner organizations are able to plan for and implement CX-related initiatives that generate the greatest return.
Appreciate your customers’ journey and the touch-points that matter most
Knowing which customers provide the greatest value helps to narrow organizational focus related to CX improvement efforts. The second critical factor for improvement planning is understanding which touch-points along the overall customer journey have the greatest impact on a customer’s likelihood to remain loyal to a given brand. These touch-points are referred to as key drivers of overall experience.
To identify the key drivers of experience, we must first map the customer’s journey with a given organization or brand from contemplation to purchase. Once the full set of touch-points has been identified, customers are asked to provide performance related feedback on their overall experience as well as their experience on each of the touch-points they encountered along the path to purchase.
ENGINE works with our clients from initial customer journey/path to purchase brainstorming through journey mapping, touchpoint survey development and performance analysis to identify the key drivers of overall CX. Our approach works with our client’s organizational metrics (e.g. NPS, overall satisfaction or a customized CX index) to determine areas in greatest need of attention and intervention.
Regularly solicit feedback from customers and employees
To this point, we have discussed the importance of identifying target customers and catering to their preferences and overall CX. We have also discussed how to identify the touchpoints
of greatest impact and the need to review organizational performance on these key drivers. Inherent in each of these prior steps is the need for multi-sourced performance input.
Often when we discuss and measure CX, we limit our view to the end customer’s feedback failing to include the perspective of front-line employees, executive decision makers and non-customers aka our competitors’ customers. Yes, the customers voice must start the conversation, but it is the supplemental insight provided by additional data sources that provide critical context to affect necessary change.
Take for example the action taken due to multi-sourced input from a luxury retail client. The brand conducted a nationwide continuous transaction-based customer experience tracking study covering 900 US locations. The data were parsed geographically and ranked in overall performance relative to pre-determined target, threshold and superior performance goals. Low performing locations were identified, and improvement plans were initiated.
After two years, a semi-annual employee experience survey was added to the CX program. Employees were asked about their own overall satisfaction working for the corporation. They were also asked to comment on their impression of overall CX. Through a combination of closed and open-ended data, we identified a traffic and staffing issue at a store that had been consistently declining in CX performance.
The store was very busy and according to the front-line employees, continuously understaffed relative to the amount of foot traffic they experienced. The brand had recently undergone a staffing reduction in an effort to reduce overhead. With more customers than they could service, CX at this location drastically declined. Customers complained of long wait-times, errors with their orders and general lack of feeling welcomed in the store. Employee morale had fallen relative to six months prior, and everyone was generally feeling overtaxed and ill prepared to care for their customers in the way that met their personal and corporate standards.
Once the executives heard the combined feedback of customer dissatisfaction and employee dissatisfaction, they were able to monitor sales volume and traffic. The brand took action and changed staffing models for the store. Within one-month, overall customer experience ratings significantly improved returning to near pre-staffing reduction levels.
Furthermore, the executives and stakeholders decided to review the staffing to traffic ratio at all store locations to identify and prevent other potential issues. Without the additional input from employees that spurred revisiting volume and staffing data, the store may have continued to operate with inadequate staff and continued to lose customers and revenue.
Our overarching goal within CX consulting and management is to improve our customer’s experience to improve our business outcomes/bottom line. Whether the goal is growth or cost reduction we can glean valuable insight into the best ways to address shortfalls in CX and design improvement initiatives by talking to employees within the organization. In this example an attempt to reduce costs resulted in lost revenue, possible brand reputation damage and decreased employee engagement. By having a fully informed collaborative conversation that incorporated the voice of the customer, the voice of the employee with decision makers involved in staffing and customer experience, we were not only able to identify the underlying source of performance decline but remedy it and take proactive steps to avoid additional issues at other similar locations.
Know how your CX compares to competitors
Now that we have identified our highest value customers, determined the aspects of their journey that have the greatest impact on overall experience and inquired with existing customers and employees to assess overall performance on these critical touch-points, it is time to pressure test your organization in the competitive environment. As we know all too well customers have many options available to them within the same product and service categories. Competitive intelligence gathering must go beyond traditional investigation of product features and price points. Enlightened organizations realize that CX can be the differentiator in highly competitive and commoditized landscapes.
While it is critical to improve on aspects of CX that fall short, decisions as to which aspects of experience need intervention should be made with strong consideration given to your organization’s current competitive performance. ENGINE recommends keeping at least an annual pulse on your organization’s CX and brand relationship strength with your customers and competitors’ customers. Reaching out to obtain comparative performance on key drivers and brand reputation allows your organization to answer three key questions:
1. How does our CX compare to top competitors?
2. What are our unique strengths and areas of CX differentiation?
3. Which aspects of CX are at or below parity with our top competitors?
Knowing the answer to each question provides greater clarity and direction for where to invest resources to achieve the greatest improvements in CX and market position. But don’t stop at correcting shortcomings, publicly give your organization the credit it deserves. When you address shortcomings head on to affect improvement in CX and overall perception, make sure this is shared with your existing and potential customers.
Every organization has dissatisfied or moderately satisfied customers who may be considering switching. Brands that solve for the sources of unrest and discuss how they are listening and acting on customer needs and desires cultivate stronger brand loyalty and minimize customer attrition. These brands are on the offensive improving CX and disrupting their industries to entice previously spoken for customers to join their ranks.
ENGINE is uniquely equipped to help your organization be a disruptive force within your industry. ENGINE’s Insights team consists of industry, CX and secondary intelligence experts. Our Accelerated Intelligence team provides a comprehensive environmental market
position assessment, your CX and Industry teams combine this knowledge with the voice of your customers, their extensive industry experience and predictive data modeling techniques to identify the areas of focus that will deliver the greatest return on your organization’s effort and investment directly connected to business outcomes of growth and cost reduction.
Understand the monetary value associated with your organization’s CX performance
As insights professionals ourselves, your partners at ENGINE understand the pressure being placed on budgets. These pressures unfortunately are not the result of the current economic downturn spurred by the COVID-19 pandemic. CX professionals have been asked to justify their programs and sometimes even their corporate positions for years, most often during budget planning efforts.
The current recession and heightened state of economic uncertainty has amplified the need and urgency to justify the importance of CX measurement programs, the focus on CX improvement efforts and professionals that facilitate and advance CX insights and initiatives.
At the risk of introducing a cliché, there is truth to the phrase money talks. With many of our client partners being asked to justify the continued existence of their long-standing CX programs, ENGINE stresses the need to directly link CX to your organization’s bottom line performance. To do so, ENGINE equips our insights team partners and executive decision makers with the revenue impact associated with performance improvement or declines in overall CX as measured by your organization’s chosen CX key performance indicator (KPI).
Earlier we discussed the importance of identifying the key drivers of overall CX. These are the touch-points that make or break your overall CX. When performance is strong, loyalty is positively impacted but when performance is weak or poor, customers will start looking for alternatives. The performance on each key driver is ultimately summarized in your overall KPI score. ENGINE partners with our clients to obtain customer revenue data and combines customer spend with CX ratings. Our advanced modeling efforts identify and account for the multiple factors outside of CX that influence revenue. The influence of non CX factors on overall revenue are controlled for which allows us to isolate the portion of overall revenue explained/impacted solely by CX.
We provide our client partners with a simulation tool and facilitate collaborative pragmatic conversations to determine the CX initiatives which will generate the greatest return on investment. The tool provides a predictive picture of the potential revenue gains and losses associated with improvement or declines in performance across CX key drivers and your organization’s overall KPI.
Resources are not unlimited; ENGINE appreciates the need to plan improvement efforts within the context of available capital and human resources. Improvement initiatives should complement other business goals and objectives already in place and must consider the goodness of fit within the corporate political climate. Understanding the potential revenue gains and losses associated with improvement or declines in CX performance within the context of your organizations’ unique culture and climate is crucial to maximizing the return on your investment of time and effort as well as the overall commitment you have to your customer’s experience and bottom line.
Align business objectives and goals with CX improvement initiatives
Is your main objective to improve performance in your CX KPI by X % or X points in X years? While this is a common business objective or goal in many organizations, in practice it tends to inhibit true improvements in CX. Organizations want to set goals and objectives that are considered ‘SMART’. However, a corporate goal to improve NPS by 10 points in five years is not always SMART in that it typically fails to be R-relevant or A-attainable when unaccompanied by an action plan directly tied to CX and business outcomes. In my experience, organizations almost always fail to consider and appreciate the actions that they will need to take to support such a goal.
When I meet with a new client for the first time, the conversation’s necessity is often sparked by an executive mandate that has fallen on them to achieve unrealistic improvement in CX as measured by the KPI of choice for CX. While not all organizations are open to the thorough evaluation of their CX and approach to improving it that we have laid out here, I am compelled to point out the potential issues that they will face by choosing to focus only on moving their KPI. Score chasing as this practice is commonly referred to does not help advance CX due to the inherent lack of direct and purposeful connection to other corporate initiatives and business objectives.
The greater the internal support a given intervention or initiative has, the greater its likelihood of success. This is why ENGINE facilitates practical planning sessions with our clients that result in the decision of which initiatives will be supported and funded. The first step in our consultative arrangement is to ensure that the organization is aligned internally on corporate business objectives and goals. This is a comprehensive assessment in which we determine knowledge, agreement and support from the front-line employees through the executive suite on stated company objectives. Identifying potential knowledge gaps, disconnects and/or dissenting opinions to shine a light on hidden landmines that may impede our future efforts.
A characteristic of organizations with advanced CX maturity is their ability to maintain a consistent focus on CX that is shared throughout the organization and supported by executive leadership. Armed with a wealth of internal and external knowledge, we arrive at our improvement planning workshop ready to collaboratively determine where to focus. Our process will be guided by ENGINE’s characteristics of effective improvement plans which dictate that all CX initiatives:
Align with business objectives
• Are actionable within the organization’s control
• Include criteria for short- and long-term wins
• Incorporate realistic performance targets
• Advance the organizations’ journey toward a holistically customer centric culture
• Identify areas of focus grounded in the voice of the customer and employee
• Commit to realistic short- and long-term performance targets
• Establish ROI associated with each individual initiative’s success and
• Are equipped with a go-to-market plan that directly reaches target customers
In the end our efforts are designed to improve CX performance as measured by your organization’s selected KPI. The goal to improve the KPI by X% or X points over a pre-determined time span is no longer the responsibility of one person without a tangible way to progress. Our process activates the entire organization to take responsibility and play a role in their CX and ultimate organizational success.
Remove organizational silos in favor of collaboration and transparency
Our score chasing example is one of the symptoms of a siloed approach to CX. Executive mandates are dictated to the team or person responsible for measuring CX. This person or team is then left solely responsible for accomplishing the ambitious task of affecting change in overall CX. These individuals typically do not sit within an area of the organization that provides them much authority over strategic initiative planning or implementation. They do, however, possess the knowledge of their CX and the responsibility to advocate for their customers by broadcasting and integrating their customers’ voice throughout the organization. In siloed corporate cultures, this effort is futile. Departments tend to withhold
information from each other, and functional areas within the organization decide which initiatives are most important without considering the impact they may have on others. An even more distressing result of siloed structures is the presence of conflicting initiatives. Each area is typically not even aware of the efforts within their own organization that are at odds with their existing actions.
To this point in our process for improving CX and the approach your organization takes to that end, we have identified silos as a potential pitfall. ENGINE’s approach actively seeks out silos reviewing existing initiatives and pressure testing their impact on CX within the context of the ROI they present. Now it is time to move on to implementation of the mutually agreed upon improvement plans.
Each implementation kick-off must start with a reminder that this undertaking is not a light lift. A renewed commitment from all parties should be stated to emphasize the fact that without continuous organization-wide engagement and support, the change we envision will not be realized.
To set each unique organization up for success and minimize the risk of reverting back to their old ways, ENGINE works closely with our client partners throughout the entire implementation process. We help pave the path to customer centricity by being ever present and involved by:
• Establishing and maintaining engagement of an executive oversight committee
• Continuously monitoring your organization’s progress toward established goals
• Providing consistent and frequent communication related to CX improvement efforts
• Scheduling and facilitating meetings with parties that have a vested interest and role in each unique improvement initiative from executive stakeholders to front-line employees thus maintaining collaboration, transparency and avoiding a return to harmful silos
• Identifying and designing modifications in initial plans to keep our efforts on track
• Soliciting feedback regularly from employees and consumers to inform our evolving approach to improved CX
The customer is at the heart of your business. At the most basic level CX will ultimately play a role in your organization’s success. To maximize your position in the marketplace, ENGINE believes you can use CX offensively to differentiate from the competition, grow your business and reduce attrition. With limited resources, the best way to advance your organization is through knowledge supported by predictive modeling that guides your path to customer centricity. ENGINE is ready to take this journey with you by improving the areas that matter the most to your target customers and deliver the greatest return on your investment while combating silos in favor of a collaborative, transparent CX improvement.
1 Rob Markey, Are You Undervaluing Your Customers? Harvard Business Review January-February 2020 The Loyalty Economy