June 23, 2009
By Christopher Musico, Contributor, CRM magazine

Follow the Yellow Brick Road to Customer Experience

NEW YORK — Despite the gloomy Monday-morning weather here in Midtown Manhattan, the mood was electric as approximately 600 attendees packed the Grand Hyatt New York to kick off Forrester Research's Customer Experience Forum. Noting the event's proximity to Broadway, Forrester Vice President and Principal Analyst Bruce Temkin urged the crowd to think about famous musical The Wizard of Oz when pondering how to survive the economic recession.

"You think recession is tough for you? It's nothing compared to what Dorothy went through, including flying monkeys, cranky witches, sadistic vegetation, and a power-hungry wizard," Temkin said. "With all those obstacles, Dorothy and her posse made it through successfully."

After joking about the importance of comfortable (if not ruby-red) slippers for any journey to experience-based differentiation, Temkin cited three Oz-like components that must be utilized today:

heart, to raise the empathy employees have for customers;
brains, to identify investment opportunities rather than institute across-the-board cuts; and
courage, to look beyond the economic recession for business opportunities.

Temkin promised attendees that improving customer experience will influence a company's bottom line -- and that he has research to back up the claim. According to statistics from his latest study, "Customer Experience Boosts Revenue," users of customer experience solutions have an advantage of more than 14 percent over laggards across three areas of loyalty:

customers' willingness to purchase;
reluctance to switch providers; and
likelihood to recommend a company to others.

Wanting to translate these results into hard dollar figures, Temkin modeled the gains a company with $10 billion in annual revenue could make with what he called "modest improvements in customer experience." In that circumstance, he determined, benefits might total approximately $284 million dollars -- $65 million in additional sales, $116 million in reduction of customer churn, and a $103 million boost via word-of-mouth recommendations.

When considering the notion of customer experience, a common roadblock many companies find themselves facing is getting caught up in surface amenities, such as providing free wireless access and couches in waiting rooms. Temkin said that high-quality customer experience requires a much deeper commitment. "It's about consistently delivering on brand messages that resonate with customers," he declared. "That's what we're talking about."

Temkin added that experience-based differentiation -- interacting with a target customer in a manner that consistently builds loyalty -- revolves around three principles that are just as germane now as they were before the economic crash:

obsess about customer needs and not product features, via digging deep into the voice of the customer and determining how needs have or have not changed;
reinforce brands with every interaction, or, in other words, make promises to your customers and keep the promises you make; and
treat customer experience as a competence, not a function, by empowering employees and using the tough times to bring them closer together, not farther apart.

Temkin stressed to the crowd that the road to differentiation via customer experience is not an easy one — in fact, he said, no company has yet to fully capture the five stages of customer experience maturity:

interested,
invested,
committed,
engaged, and
embedded.

Most companies, Temkin said, are in the first two stages, and leading-edge companies may have reached "committed" status. "Most companies are not doing a good-enough job yet -- but you have an opportunity to do it," he told the crowd. "It will take heart, brains, and courage to successfully go along that journey, but it's worth the investment. Not just because hundreds of millions of dollars are at stake, but because you can differentiate yourself and your companies."

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