Working from the 'Outside In'

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It is no secret that customer experience has become a critical component of a company's ability to stay on top of the competitive landscape. In their new book, Outside In, customer experience experts Harley Manning and Kerry Bodine of Forrester Research share insights and lessons they have culled from more than a decade of research on companies that transformed their customer experience strategies into viable business advantages. Bodine spoke with Associate Editor Judith Aquino about what it takes for a company to become truly customer-centric.

CRM: You describe six disciplines of customer experience (strategy, customer understanding, design, measurement, governance, and culture) that companies should adopt. Are they all equally important?

Kerry Bodine: These disciplines do not form a road map; they are pieces of a puzzle, so they are all equally important. The disciplines help companies take every aspect of their business and make it customer-centric by putting customers at the center of all decision-making. Instead of taking an "inside-out" approach, companies have to use an "outside-in" view. This takes many years to do, and no single company has mastered all six disciplines yet.

CRM: I thought your case study on Office Depot was interesting. It turned out the company was not asking the right questions about its customers' experiences. Have you encountered this problem at other companies as well?

Bodine: The problem is companies tend to ask questions in the wrong way. Input from mystery shoppers, focus groups, or surveys are good for only certain types of insights. They're not as good for getting insights that help you design interactions your customers actually want and need. [Office Depot President] Kevin Peters did a simple thing: He spoke directly to customers and watched them shop. There are many businesses that are missing this opportunity because they equate talking with their customers with giving them a survey. Account managers and other front-line employees also hold a treasure trove of information about your customers.

CRM: What surprising trends did you find as you conducted your research for this book?

Bodine: One thing that knocked our socks off was an exercise that was done by one of the companies we interviewed, Watermark Consulting. They looked at what the stock performance would have been if someone had invested $5,000 in the top 10 publicly traded companies in Forrester's Customer Experience Index (CXi) and in the bottom 10 publicly traded companies. Over a five-year period in which the S&P 500 was essentially flat, the CXi leaders ended up gaining 22 percent and the CXi laggards lost 46.4 percent. This makes the case that the market rewards companies for improving their customer experiences.

CRM: In improving their customer experience strategies, what areas do companies often miss?

Bodine: Design is largely misunderstood in the business world. Design is a process for creating experiences that takes into account the needs of customers, employees, and other business stakeholders. There are standard steps in a user-centered design process: researching your customers' needs, creating prototypes, testing your solutions with actual customers and employees. The design process is especially effective when companies bring customers and employees into workshops to work on developing ideas together. We don't see many companies doing that. Great customer experiences don't happen by accident. They need to be actively designed.

The other area I would mention is measurement, because many people have a hard time understanding how to measure customer experience. There are three types of metrics you need to measure. The first is perception metrics. This gets at how your customers perceive the experience—what they think and how they feel about it. Second is descriptive metrics—the operational metrics that tell you what really happened in a customer interaction, how long they were on hold, for example. Then you've got outcome metrics, which are looking at what the customer is going to do as a result of [an] experience, such as buy from your company again or recommend you to a friend. Every company needs a framework like this for measuring their customer experiences.

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