• January 29, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

The 5 Levels of Customer Experience Maturity

SAN FRANCISCO — Any path out of this ragged economy will likely require a monumental shift in how companies currently operate. Understanding what customers want can only come from looking at a situation through their eyes. In other words, says Bruce Temkin, a vice president and principal analyst at Forrester Research, "you need to shift your focus from inside-out to outside-in." In his presentation at the 2009 Net Promoter Conference here this week, "Where Are You on Your Journey? The 5 Levels of Customer Experience Maturity," Temkin explained to attendees that, while they may claim to have the best interests of the consumer in mind, such sentiments are often completely off-target without a commitment to understanding the actual customer experience.

In the final quarter of 2008, as the economy hastened its deterioration and the nation discovered it had actually been in a recession for a year, Temkin surveyed what he characterized for the audience as "a panel of customer experience professionals" -- 91 percent of whom classified customer experience as "critical" to their companies' success. In addition, 80 percent of respondents felt that customer experience is the factor by which their companies seek to differentiate themselves. And yet, Temkin said, despite such lofty beliefs and sincere intentions, "no one is doing a really good job."

Fortunately, the lack of maturity in the marketplace is the perfect opportunity for companies to rise above the noise. "If everyone was good at something that's very important to your business, it would not give you a lot of opportunity to differentiate yourself," Temkin said. Given that this strategy has yet to dominate the market, Temkin encouraged the audience by ensuring that there's "enormous opportunity for people who care, who focus, [and] who put the customer experience ahead of other things to differentiate themselves."

As part of the report, Temkin evaluated 12 industries -- from Internet service providers to retailers -- based on responses from over 4,000 consumers. Participants were asked three questions:

  1. Did the interactions meet your needs? Only retailers, insurance providers, and hotel providers received "good" (above 80 percent) scores.
  2. How easy is the company to work with? Only retailers and hotel providers earned the "good" label.
  3. How enjoyable are these firms to work with? None of the verticals scored above 80 percent.

Then Temkin asked the million-dollar question:

       4. "Why is it that firms let customers down?"

Though companies are well-intentioned, they fundamentally lack what Temkin had referred to earlier as an ability to see things from the customer's point of view. Companies, he said, are focused on:

  • high company knowledge;
  • high interest in topic (i.e., product or service);
  • varied understanding of customers;
  • politics; and
  • egos.

Consumers, on the other hand, are concerned about:

  • needs;
  • desires;
  • interests; and
  • knowledge.

"Even if you try your best, and you try and meet customer needs, you are likely going to be too complicated," Temkin said. "Don't expect them to understand processes — they don't." The only way to close the gap between what customers want and what the company delivers is to be explicit about driving the entire organization based on the customer need. Then Temkin turned to a pop-culture reference to make his point: Quoting Morpheus, the character played by Laurence Fishburne in the trilogy of films that began with 1999's The Matrix, he said, "there's a difference between knowing the path and walking the path."

Temkin then broke down key strategies for building a strong, lasting customer experience:

  • Obsess about customer needs, not product features: Adding this gadget or that widget may look cool, but if the "innovation" confuses the customer, the entire purpose is lost. Temkin encouraged the audience to engage in a "LIRM"-ing process: listen, interpret, react, and monitor. These elements, he said, are critical to developing a program to capture the Voice of the Customer.
  • Reinforce the brand with every interaction, not just communication: Every employee in the company needs to understand the brand message and the brand promise. Every interaction should be based on this promise, a promise that must be insulated from damage when times get tough and cuts need to be made.
  • Treat customer experience as a competence, not a function: Customer service is everyone's priority, not just that of the contact center. Call it "customer experience," "customer advocacy," "customer insight—anything, Temkin pleaded, that avoids dumping it into a siloed department. "The customer experience team cannot be another ‘function,' " Temkin said. "The group has to remain as a support to other parts of the organization." The leader of this group, he added, can be anyone — the CIO, the CMO, the COO — but the person cannot be more than two levels under the CEO. More important, whoever leads the group must possess enthusiasm about the cause — and be a champion for it.

"Anything you do in your business to create more promoters -- and eliminate more detractors -- is good," Temkin said, though he strongly cautioned against flawed practitioners who single out the response to any one question as "the insight they need to run their business." The development of a successful program requires much more than simply inserting a one-liner in a survey, Temkin said. He then went on to detail the five critical steps to executing a customer experience program based on the Voice of the Customer:

  • Relationship tracking: Track the relationship between you and your customers. How many are your promoters, detractors, passives? This is where the Net Promoter score can come into play.
  • Interaction monitoring: Pose satisfaction questions to consumers based on their specific interactions with your company.
  • Continuous listening: Scour the Web, your contact centers, emails, and letters for unstructured comments about your company. Truly listen to customers' unsolicited attitudes and encourage executives to seek out detractors. Temkin did caution, however, against becoming obsessed with comments in the blogosphere. "It's more important to create an experience people think is wonderful than to influence how they're trying to talk about their experience," he said.
  • Project infusion: Ensure that customer insight is at least a factor in every strategic move.
  • Periodic immersion: Not only is executive buy-in important, but executives need to engage in what they preach. Have them work on the front line for a day, or have them speak directly with customers to understand what it's like to be on that side of the equation.

Temkin told the crowd that he believes that creating a customer experience program is perhaps one of the most difficult challenges a company faces, primarily because it often requires the company to change deeply rooted corporate cultures. Achieving such a program, he said, involves five steps that correlate to five levels of maturity:

  • Level 1: Interested (19 percent) - customer experience is important, but funding and upper-level support is minimal.
  • Level 2: Invested (22 percent) - customer experience is important and initial programs are being put in place -- but the effort is still not connected with profitability for the organization.
  • Level 3: Committed (11 percent) - customer experience is critical to the company and executives understand how it's connected to fundamental results: It's not customer experience for customer experience's sake.
  • Level 4: Engaged (8 percent) - customer experience is a core part of the company's strategy and objectives.
  • Level 5: Embedded (4 percent) - it's in the company's DNA, the essence of everything and anything the company does.

Temkin told the audience that the time frame for achieving the first four levels is at least 4.5 years -- in fact, the survey was composed of a self-test taken by over 300 companies and 37 percent of companies had not gotten to the first level. While the process involved in the first two stages are more cognitive and awareness-based, the more-mature stages require cultural changes that often face obstacles stemming from unsupportive executives, or simply the inflexibility of the company as a whole.

Temkin assured the audience, however, that slow and steady wins the day, and that initiatives moving toward optimizing the customer experience will deliver motivating rewards along the way.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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